SWITZERLAND – Kevin Carter, European head at Watson Wyatt Investment Consulting, believes that value for money and flexible products will be top of institutional investors’ wish lists in 2010.
Speaking at the fifth annual Institutional Fund Management conference in Geneva this week, Carter said that the industry is passing “from a champagne-popping time to much more difficult spaces”.
Pension fund deficits and regulatory requirements were among the issues putting pressure on institutions and were “overpowering” for trustees.
He told delegates: “Clients are not going to tolerate under-performance. Clients will be tougher on managers who can’t or won’t deliver.”
He also stated that governance will determine client choices, and portfolios would have greater diversity.
In terms of value for money and active products, Carter’s presentation stated: “Active management adds value if done well.” It added: “Winning managers must embrace the boutique model even if they are large firms.”
With regards to flexible/targeted products, Carter said that clients expected manager selection and investment strategy to be more integrated. They were also seeking more versatile solutions.
“This is already happening, across an increasingly diverse range of products,” he said.
And he said that a “revolution” is unfolding in the way institutions benchmark their assets – with an increasing focus on liabilities, away from regular indices.