Business is booming for US pension managers in terms of European pension assets managed, with the traditionally resistant UK market now proving one of the most lucrative for US investment companies.
This drive into Europe is monitored by international investment consultant William Mercer, with the table below showing US pension asset increases over the year 1996/97.
A spokesperson for JP Morgan credited a substantial part of its growth to the increase in UK defined benefit funds (overall UK pension assets rose from £2.3bn ($3.7bn) to around £4.7bn) which he describes as particularly strong in 1997 with the trend continuing into 1998.
In Europe JP Morgan's mandate relationship with the German group DEKA in a sub-advisory role led to a large inflow of money, alongside a variety of fixed income and equity mandates being managed. Increases in the Dutch pension asset market are also described as extremely encouraging, with assets passing $1bn.
Europe is an extremely key target for JP Morgan," added the spokes-person, " and we are looking to further develop our UK DB schemes alongside the UK defined contribution schemes we have just launched. These allied with a whole host of assets coming along in Europe mean future success is shaping up well."
Fidelity International also attributed much of its considerable European pension assets increase to strong UK growth, which has seen the company capture mandates from the mineworkers pension scheme and several borough councils, including Bromley and Clwyd.
" Our increase in UK pension fund assets has been substantial, in what has been a traditionally difficult market to break into," says Anna Roads, marketing director at Fidelity. "However, the situation in Britain has become more open recently with a number of the larger UK houses underperforming, allowing us to build up our market share."
Explaining that Fidelity had enjoyed consistent outperformance over the past five years, she also stresses that the company's investment philosophy and position as a large international investment manager were key factors in its success.
" Our UK position is extremely gratifying and we are winning mandates for specialist UK equities, not just balanced portfolios, which bodes well for the future where I feel companies are looking at a more international approach for fund management," Roads comments.
David Scott, director of portfolio management at Salomon Brothers offers a similar overview of the general success of US companies in securing European pension assets: "We have seen a greater willingness by European funds to allocate into US bonds, and I know this has been even greater in the equities market. I think the reason is that European pension funds are looking increasingly at developing international investment in a bid to further growth."
Jean François Schock, managing director of State Street's sales office in Brussels, although acknowledging that 1996/97 had been a fairly 'flat' year in Europe, following the loss of one very important mandate, was particularly upbeat about the growth trend. "Our figures in Europe at State Street are not always clear as we hold a large part of our European assets in the US, and in fact over 1996/97 we saw a slight rise in these. However, performance since the beginning of 1998 has already been tremendous with rises of around 30%."
" I think the reasons behind this growth are twofold. Firstly, we are now better equipped to manage European accounts, particularly in the UK where we have adapted our previously specialist styles to suit the more predominant balanced type funds. Secondly, our broad global product line, for example the fact we have equities in over 70 markets including emerging countries, is becoming increasingly attractive to European funds. Alongside this, they know US companies such as State Street have a reputation for quality disciplined asset management they can trust.""