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Impact Investing

IPE special report May 2018


UK pension trustees set to challenge managers

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UK - A survey of pension funds has found that trustees are becoming more likely to question their investment managers over transaction costs and activism.

Mercer Investment Consulting said that it has surveyed pension funds and found that trustee awareness on costs and activism “has risen significantly” as a result of the Myners Review.

“The number of funds challenging managers on these issues is set to double in the near future, pre-Myners from about 20% to close to 50% for funds greater than 25 million pounds,” Mercer said in a statement.

It also found that it “was the possible future use of hedge funds that is receiving the most attention”. For larger funds, 21% are considering investing in private equity, whereas 10% are already in the asset class.

A survey released earlier – by rival consultancy firm Watson Wyatt – found that less than 20% of pension funds surveyed wanted elements of the Myners code on trustees to be mandatory.

Watson Wyatt found that 61% favoured the continuation of a voluntary approach to implementing elements of the Myners code.

“The mandatory approach attracted 19% of votes leaving 20% of respondents undecided,” Watson said.

Nick Watts, European head of investment consulting at Watson Wyatt said: “The introduction of the Myners code was important to bring into sharp focus governance issues in the pensions industry. Progress has been made in the past two years, but continuing efforts are still needed to increase further transparency, competency and efficiency in our industry.”

The third main pension consultant, Hewitt Bacon & Woodrow, has also surveyed trustees about Myners.

“The Myners report has had a positive impact on the UK pension fund industry,” it said. It said that 68% of large pension funds are now compliant with, or have entered into the spirit of Myners' recommendations. But it said that only half the respondents felt that trustees were positive about the Myners code.

Sixty-four percent of funds have devoted more resources to strategic asset allocation - in line with Myners, Hewitt said.

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