UK - Investment managers are developing and embracing multi-asset approaches to serve the growing defined contribution (DC) market in the UK, the Investment Management Association (IMA) has said.
Speaking as the IMA published its annual asset management survey, the group's head of research Jonathan Lipkin said the industry is looking to deploy its "intellectual capital" in a way that targeted a market set to expand due to the introduction of auto-enrolment.
Lipkin said that while defined benefit (DB) schemes will remain "hugely important" in the UK institutional landscape, the shift to DC will only be accelerated due to the 2012 reforms.
He said many companies felt it was time to think about different approaches to default funds and strategies to help implement them.
"Rather than being one among several components in a default strategy - for example, if you are an emerging market equity specialist or a developed market debt specialist - why not think more broadly, think of multi-asset approaches," he said, citing this as a way the intellectual capital of the industry could be redeployed.
He said this would not result in the end of specialist asset managers, but instead allow for the growth of firms that offered both niche and more broadly defined solutions.
Asked if the investment management or the pensions industry was the driving force behind these new solutions, he cited research conducted by the National Employment Savings Trust (NEST) into the needs of their target market and creating a default option that differed significantly from the market norm.
He said this was a sign of pension schemes and providers looking more carefully into the needs of the customer base.
"There is always a tension in these things between giving people what they need and what they think they need," he said, admitting that instead of shifting the investment approach, perhaps communications should be improved to better explain why a high-risk strategy could benefit all involved.
However, a shift away from high-risk strategies has been witnessed in the past few years, with the financial crisis resulting in growing interest in liability-driven investment (LDI) mandates.
Lipkin said that while it could be reasonably expected that the sector's growth would continue in light of a rise to an estimated £250bn (€283bn) held in LDI mandates, he could not say with any certainty what the trends for pension funds would be in future.