Selection isn't everything, fund tells Mercer
AUSTRIA - Selection of the right manager alone does not necessarily lead to a better performance, ÖPAG head Johannes Ziegelbecker told IPE.
Officials at the €1.9bn multi-employer Pensionskasse have hit back at criticism by consultancy Mercer which suggested in a recent press statement there is a "need for action" with regards to manager selection at some Austrian pension funds.
In its analysis of the average 2% result for Austrian Pensionskasse, Mercer found the difference in returns between the best and the worst performing funds is "bigger than it has been in a long time".
With equal equity exposure of 35%, the best fund achieved 5.7% while the worst only returned 0.36%.
"From the broad performance range, it becomes clear that there are investment experts in the Austrian pension fund sector who can achieve a sufficient performance even in difficult markets," said Michaela Plank, pension fund expert at Mercer Austria.
But Ziegelbecker remarked "afterwards, it is always easy to know what would have been the right thing to do", adding Mercer's conclusion - manager selection would help increase performance - is "not completely true".
"Pension funds have to decide on benchmarks, strategic asset allocation, the use of alternatives and overlays - all of which has nothing to do with manager selection."
"Manager selection is one aspect of performance but the other factors are important as well," Ziegelbecker explained.
ÖPAG returned 1.8% last year and 4.88% annualized over the last 10 years, slightly above the average of 4.87%.
"There is too much focus on the short-term performance - especially if you are using cyclical managers the long-term view is important," Ziegelbecker noted.
According to calculations by ÖPAG, Austrian pension funds increased their portfolios by 50% on average since 1997with Ziegelbecker's fund heading the field with 61%.
"We are not using one investment consultant but specialists for individual tasks - there is never one who knows everything," Ziegelbecker argued.
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