Schroders chief foresees death of tracking error

EUROPE – A top executive at Schroders has foreseen that tracking error may no longer be the best way of measuring portfolios as the focus moves towards risk and liabilities.

“Tracking error could be dead as a measure,” said Curt Custard, head of multi-asset solutions. He called for a “new language” to deal with volatility and liabilities.

Tracking error is defined as the divergence between the price behaviour of a portfolio and the price behaviour of a benchmark.

Custard – who joined Schroders last year from Allianz, where he was chief investment officer of multi-asset products in London - also saw the role of asset managers changing. “I see asset managers working with the consultants. The role of asset managers is not just to provide product. Most consultants would agree with that.”

He said the current landscape had moved on from the old ‘tri-polar’ world of a few years ago, where funds, asset managers and consultants co-existed. Now, he said, it was more like a ‘Venn diagram’ where different players’ roles were more diverse.

Custard’s comments chime with other industry figures. Andrew Dyson, head of institutional business at Merrill Lynch Investment Managers in Europe, has spoken of his ideas about a “new model” for the relationship between investment consultants and asset managers.

Custard also he explained that the firm sees the Netherlands as a “critical market” – and that Schroders is a natural fit for this “cutting edge” market.

The new regulatory environment of the FTK, the new financial assessment framework for pension schemes, “dovetails with how we look at the world”.

Schroders yesterday said it had a net outflow of £8.4bn (€12.2bn) of institutional assets in 2004 as investors withdrew from balanced mandates.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2563

    Asset class: Mid & Small Cap Equities.
    Asset region: Global.
    Size: USD $130m.
    Closing date: 2019-09-27.

  • QN-2564

    Asset class: Large Cap Growth Equities.
    Asset region: Global Developed Markets.
    Size: USD $130m.
    Closing date: 2019-10-04.

  • DS-2567

    Closing date: 2019-10-02.

  • QN-2569

    Asset class: Local Currency Bonds.
    Asset region: Global Emerging Markets.
    Size: $500m.
    Closing date: 2019-10-10.

Begin Your Search Here