UK - An investment manager has criticised consultants for leaving certain asset classes in "limbo", instead of educating institutional investors about potential new investment opportunities.
Tony Foster, chief executive at Marine Capital, spoke to IPE following research by Aon Hewitt that claimed trustees took at least three months to reach an investment decision regarding new asset classes.
Foster said it was unusual for consultants to make such an allegation, as they were often the source of delays.
He said there is a group of accepted asset classes and that any assets that fall outside this group are not considered.
"If you're a consultant, your easy route is to discuss opportunities within those accepted asset classes," he said.
"You don't have to do anything else. From a trustee's perspective, you may have done your job very nicely and not rocked anybody's boat."
Foster described the situation as a "Kafka-esque limbo", whereby pension funds often say consultants failed to suggest certain asset classes, while consultants counter that the schemes failed to request any information about anything outside the accepted field.
He theorised that it required for a consultant to champion an asset class before it became acceptable, but that they were "extremely difficult" to approach, sometimes "touchy" and "protective".
Asked about establishing a three-year track record that many pension schemes use as a yardstick for investing in a new asset class, he said: "There you have a problem. If you are a new asset class, there is no institutional investment track record. You can't, by definition, have one. That's back to the Kafka-esque argument."
He cited the social networking site, Mallowstreet, aimed at pension fund professionals, as a way of educating trustees, because, "in an allegedly more relaxed forum, you might get people talking".
Pointing toward the rise of infrastructure investments, he said that five years ago the asset still stood on the outside, but had since become a common option.
However, he once again stressed that managers needed to "get into the consultants" to achieve the goals of approaching institutional investors.
No comments yet