European DC fund hunts for larger pension fund for asset transfer
An unnamed €150m European defined contribution (DC) pension fund is using IPE Quest to find another pension fund into which it can transfer its assets.
The pension fund said it had a target return of 5% net per annum, and that there were no investment restrictions in place.
While IPE Quest normally enables institutional asset owners to search for asset managers, this is the first time the service is being used to facilitate an asset transfer from one fund to another.
The pension fund, being advised in the search project by consultant Felix Kottmann of Zurich and Dubai-based Kottmann Advisory, is looking for a Europe-based pension fund or pooled pension fund structure into which it will transfer all financial assets, for asset management purposes only, according to IPE Quest.
The manager of the fund told IPE: “We are a smaller fund with 14 external asset managers. We have good diversification, but we are unhappy with the manager selection we’ve had all these years.”
He said the pension fund preferred to look for another scheme to manage its assets because too many managers were more interested in earning fees for shareholders than producing outperformance for clients.
“Co-operation among pension funds is more valuable for us in terms of performance and cost because pension funds are more sensitive – they have the same needs,” the manager said.
He predicted that asset owners such as pension funds would increasingly manage their own money, with consolidation in the industry taking place as smaller pension funds sought steady returns through more stable performance from large, well-managed and diversified pension funds or pooled solutions.
He predicted these smaller funds would eventually team up with the most attractive schemes available.
He added that the pension fund and Kottmann believed a platform such as IPE Quest was the most suitable option for its search.
“We wanted to go this unique new way to search the first time, not an asset manager but another pension fund for our needs,” he said.
The deadline for the search is 18 December.