NETHERLANDS – Dutch pension funds are less inclined to outsource their asset management lock, stock and barrel to one-stop shop fiduciary managers and are reclaiming control of their investments, a survey conducted by IPE sister publication IPNederland suggests.
IPNederland's fifth annual pension fund survey questioned 34 corporate and industry-wide schemes with assets under management (AUM) ranging from €120m to more than €20bn.
Approximately 56% of respondents are currently employing a fiduciary manager, either full-service (38%) or in a modular approach (17.6%).
A year ago, this percentage stood at 68%.
This year, 11.8% of respondents said they were planning to hire a fiduciary manager in future, up by 3 percentage points from last year.
In total, the percentage of pension funds that either now use or plan to start using a fiduciary manager has declined by some 8 percentage points since 2011.
The number of pension funds that do not in any way intend to opt for fiduciary management has risen for the first time in five years, to more than 32.3%.
Pension funds in control
Just 11.8% of respondents believe pension funds delegate too much control by opting for fiduciary management.
A year ago, this stood at 20%, and a year earlier at 30%.
In 2012, nearly 90% of respondents were of the opinion that opting for fiduciary management did not necessarily result in trustee boards relinquishing control of their asset management.
According to pension funds surveyed, the best way to remain in control of asset management is by opting for partial or 'modular' fiduciary management solutions, with final responsibility for manager selection and/or risk management residing with the pension fund.
More than 56% of respondents believe the best way for pension funds to supervise and control the fiduciary manager is through the establishment of an internal trustee support department, up from 47.4% in 2011 and 44.4% in 2010.
Several respondents stress the importance of sufficient expertise and hands-on involvement from the side of the trustee board.
One respondent said: "Legally, and also from a governance perspective, the trustee board should be in charge."
Another added: "When it comes to decisions, you should always keep hold of the reins."
In previous years, many respondents indicated that it was too early to say whether or not they were satisfied with the fiduciary solution.
More than 22% in 2010 and more than 21% in 2011 said it was "too early to tell".
This year, however, all of the respondents have formed an opinion – nearly 48% are happy with their fiduciary management solution, while more than 26% report being satisfied to some extent.
In 2011, those figures were 21% and nearly 37%, respectively, while in 2010 they were 50% and 16.7%.
In 2012, one pension fund reported that the fiduciary solution had failed to meet its expectations, the same as the year before and one more than in 2010.
Of the pension funds that have opted for a fiduciary solution, nearly 70% intend to outsource their asset management entirely going forward, while 13% will opt for in-house management for part of the portfolio.
Seventeen percent of respondents are considering a different solution.