New UK firm to provide analysis to pension funds
UK – A handful of high-profile UK investment experts have formed a new venture aimed at providing long-term strategic equity analysis to pension funds and large fund managers.
The new Darwin Group brings together John Holmes, former chairman of Holmes and Marchant, James Penney, managing director of a corporate strategy boutique, Anthony Esse, former marketing director of Hermes Pensions Management, John McGrath, recently retired chairman of Boots, and Cris Derby, former managing director of EMAP.
Peter Moon, chief investment officer of the Universities’ Superannuation Scheme, will be a senior adviser.
The Darwin Group will provide long-term analysis, initially on the FTSE250 companies, to aid in-house managed pension funds, and fund management houses that invest on a long-term basis.
Darwin believes that analysis on the long-term strategic health of companies is not considered by equity analysts, rather, financial health (earnings) is the main consideration. This short-term view does not help those long-term investors, and additionally creates conflicts with companies which do not feel that fund managers fully understand their strategies.
Darwin intends to fill this gap by forming relationships with selected funds to help them improve the quality and depth of insight. “This helps analyst ask the right questions of company management and focus their mind on the long-term sustainability of the company,” it says.
The research of company’s long-term strategies and health is designed to be used alongside short-term financial research so that investors can pick companies that will outperform in the long run and therefore produce alpha. The research should also help investors to avoid companies with long-term poor strategic health, and therefore prevent value deterioration.
As the service will essentially increase the chances of a fund manager’s equity fund performance, Darwin is only offering it to clients which are not in direct competition with each other. As in-house managed pension funds are not in competition, the service will be available to all.
While initially the focus will be in the UK, “there is no doubt that the service will move wider when appropriate to do so,” says Esse.