Redington to expand offering to small, medium-sized pension funds
UK – Redington is set to expand its advisory offering to small and medium-sized pension funds with the launch of a new platform for designing and implementing investment solutions.
Robert Gardner, founder and co-chief executive, told IPE the UK-based consultancy was about to launch RedCIO, a new "implementing consultancy" offering.
The platform aims to implement specific investment strategies tailored to the needs of schemes with £100m (€118m) to £1bn in assets under management.
"A lot of pension funds continue to face the volatility of the market – the uncertainty of whether it is the smoothing or the liabilities, or the change in the inflation rate, and so on," Gardner said.
"What we need to do is repair the deficit and improve members' security. For the last seven years, Redington has developed a seven-step process that we work through with all our clients in order to do so."
The seven-step framework consists of defining a pension fund's objectives; gaining access to an "LDI hub"; defining liquid market strategies; defining liquid and semi-liquid credit strategies; defining illiquid credit strategies; defining illiquid market strategies; and introducing ongoing monitoring.
But Gardner stressed that Redington's current client base consisted mainly of large pension funds having over £2bn in assets under management on average.
He also said most of those clients had substantial in-house resources such as an internal CIO or head of investment, for instance.
As part of its expansion plan, Redington is therefore looking to develop its offering by helping smaller pension funds address the same challenges encountered by larger schemes.
"RedCIO will design and develop investment strategies for those clients to meet their specific funding requirements in combination with the use of a dedicated implementation asset manager to monitor and manage overall scheme risk on a daily basis" Gardner said.
The new offering will serve as an implemented consultancy business, with the appointment of a dedicated implementation asset manager for the pension scheme and then using RedCIO to deliver the seven steps framework developed by Redington over the years.
"The idea is that the trustees can be left with the strategic aspects around the hedging ratio, the budget, and so on, while the day-to-day tactical and implementation is delegated to RedCIO, working in partnership with the implementation asset manager," Gardner said.
The implementation manager will ensure the investment strategy designed by Redington is implemented by the pension scheme appropriately.
Gardner said Redington had no plan in the immediate future to launch a fiduciary business, by which the firm would manage assets on behalf of its clients.
"RedCIO is a natural extension of what we are doing, and we have been thinking about this move for the past two years," he said.
"However, full fiduciary management requires an up-scaling in terms of regulatory burden, financial capital to underpin that, systems and operations and so on," he said.
"So there is no plan to do fiduciary management in the next few years. But who knows where we might be in five years?"