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Aon's multi-manager targets smaller pension funds

UK - Aon Consulting, UK-based investment consultant, has appointed 13 investment managers for its new multi-manager operation, aimed at small and medium-sized UK pension funds.

Aon IIS service (Aon Integrated Investment Solutions service), the new operation, combines the strategic advice of Aon’s consulting practice, and manager of managers pooled funds, provided by the newly formed Aon Asset Management.

The manager of manager funds will initially cover six core asset classes: UK equities, US equities, European equities, Japanese equities and corporate bonds. There are, however, plans to extend the range to incorporate alternatives such as private equity or property.

Capital International, Lindsell Train, Liontrust Investment Services and New Star Asset Management are to be responsible for the running of the UK equity fund.

MFS International Advisers and Wellington management Company will manage the US equity fund.

Blackrock International and Capital International have been appointed to manage the European equity fund.

Managing Japanese equities will be Marathon Asset Management and Martin Currie Asset Management.

APS Asset Management and Lloyd George Management will be the investment managers for the Far East equity portfolio.

Aegon Asset Management and Deutsche Asset Management will manage the sterling corporate bond fund.

Aon received approval from the Irish central bank to establish the new OEIC back in July but has been waiting to appoint managers, and to receive FSA approval before launching. The product is registered in Dublin, but will operate from London.

The fund already has £700m (e1.11bn) of assets from about 20 clients, and is expected to have raised £1bn by the end of the year. Return targets, after fees, are 1.5% above the domestic benchmark for the equity funds and 0.75% above the benchmark for the corporate bond fund.

The service was established to offer a complete investment solution to smaller pension schemes, which have often had only limited investment options due to their size. “Aon IIS will allow even small schemes to move away form using a ‘peer group’ benchmark and to adopt an asset strategy that is appropriate for their funding level and liability profile”, says Adrian Swales, chief executive of investment at Aon.

Questions raised over potential conflicts between advising pension find trustees and managing money have been dismissed by Aon. In July, Chris Erwin, investment principal at Aon in London said: “trustees are quite able to decide for themselves what they want, To suggest that there is a conflict of interest is frankly insulting their intelligence. It’s entirely up to them.”

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