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Special Report

Impact investing


Europe's markets come the consultants' way UK

The UK continues to thrive as the hub of Europe's investment consultancy industry. It is just more advanced and keeps on going," says Anthony Ashton at Callan Bacon & Woodrow in London.
Pension funds such as Hermes which runs the British Telecom and Post Office pension schemes have paved the way for more proactive investing behaviour with their efforts on corporate governance issues, their most recent venture being with the giant US pension fund CALPERS. The heralded move to specialist management continues at full throttle as funds look away from 'plain vanilla' investments to the areas of alternative products such as hedge funds, derivatives and enhanced indexation techniques. The specialist move has come, much to the dismay of those managers who continue on the balanced trail. Watson Wyatt's report, echoing beliefs long held amongst some of the consultants such as Frank Russell, which denounced the balanced managers has caused some concern for the big balanced managers in the UK: Mercury Asset Management, Deutsche Morgan Grenfell, Schroders, Philips & Drew and Gartmore, who have been referred to as the consultant industry's 'favourites' when it comes to manager selection.
The consultants themselves have also come under fire. At the 1998 NAPF conference, they were criticised for their lack of transparency, and equally the lack of tools available to measure the consulting industry. The M&A activity opened the year with the Callan and Bacon & Wood-row tie up and closed with the SNL Mercer venture. The latter merger brought about some concerns, that due to the stranglehold consultants already held on the UK market, it would restrict the practices of managers looking for UK business. However, some of the concerns may have been unfounded, as one custodial player commented "It would have been a different matter if they had merged with Watson Wyatt."
The merger also prompted speculation in the industry that Aon would soon make a bid for insurance broker, Willis Caroon. Aon Consulting is currently focusing on developing its efforts in the UK market following the merger of its actuarial and benefits consulting, administration and investment consulting practices into a new division dedicated to pensions and investments. Rachel Oliver"

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