NETHERLANDS - Dutch pension funds are looking to increase their use of unconstrained active investment management, according to a survey by JP Morgan Fleming Asset Management.
"In the future, institutions appear to be looking for greater polarisation between pure passive index-tracking for some parts of their portfolio and fully unconstrained active management for other parts," JP Morgan said in a release.
"While intentions are mixed across different markets, responses indicate that institutions generally intend to reduce their use of constrained active management and increase unconstrained active management.
"This intention is most in evidence in the Netherlands where four out of five respondents want to increase their use of unconstrained active investment management."
The firm found that 49% of all European institutions which responded to its survey already employ absolute return strategies - with 27% willing to consider one. "Over two-0thirds of institutions are willing to use both long and short-positions to achieve their absolute-return objectives," the report said.
JP Morgan also found that four out of five of all respondents ranked tactical asset allocation most highly out of a selection of non-traditional strategies. And long-only absolute return strategies were being targeted by two out of three institutions.
"The trend of relative performance which has gripped the institutional industry for so long is clearly in decline," said Peter Schwicht, the firm's head of European institutional business.
"With almost half of institutions already using absolute-return strategies for at least part of their portfolio - and about the same proportion using or looking to use a liability -based benchmark, it is clear that Europe's pension funds are more interested in limited absolute losses and keeping pace with liabilities than rewarding fund managers for relative performance against the market."
JP Morgan surveyed 200 European pension fund providers, representing 1.1 trillion euros in assets.