UK - The chief executive of the Merchant Navy Offers' Pension Fund (MNOPF) has suggested fiduciary management is "most attractive" for schemes with more than £1bn (€1.1bn) and should not be considered by ones with less in assets under management.

Andrew Waring, whose scheme recently appointed Hymans Robertson as independent investment adviser in addition to naming Towers Watson as fiduciary manager last year, explained that the expense of a delegated chief investment officer was likely to be too high for those below the threshold.

He suggested that the smaller schemes instead could opt for diversified growth funds or balanced mandates in place of implementing a fiduciary management programme.

He also conceded that schemes with more than £5bn in assets, compared with the MNOPF's £3.3bn, were unlikely to employ it, as they would favour internal investment teams.

"A large part of the role is effectively replicating what would be an internal investment team," he said.

However, John Dickson, partner at consultancy Hymans Robertson, was unsure if the issue would be quite as straightforward as £1bn being the absolute minimum in assets to make the move viable. 

"There will be a tendency that way, [but] I don't think it will be clear-cut that certain size of schemes won't adopt the model," he said, adding that smaller schemes had already adopted the fiduciary management model.

Dickson also distanced himself from the suggestion that cost was an issue, pointing to the idea that the goal of a fiduciary manager was to improve performance compared with a regular manager.

Discussing Hymans Robertson's recent appointment as independent investment adviser, offering the MNOPF's trustees advice on decisions made by delegated CIO Towers Watson, Dickson admitted they were unsure quite how the relationship would work.

"I don't think either ourselves or Andy [Waring] are absolutely sure of the full remit of that role," he said, explaining that Towers Watson would manage assets "as they see fit", within the parameters agreed with the scheme.

It was Hymans Robertsons' role not simply to criticise, but guarantee all investment decisions were fully understood and challenge on behalf of trustees if this was not the case, he said.

Waring explained the search to appoint an independent investment adviser saw MNOPF consciously exclude any consultants already in the fiduciary management business.

Dickson added: "The fiduciary managers themselves are more likely to be comfortable with an entity like ourselves - we are not trying to compete against what they are offering - because otherwise, while confidentiality agreements are in place, we are getting lots of knowledge of how they go about it."