Innovation and ideas are “key” to pension fund returns

Pension funds that can innovate or adopt new ideas quickly are likely to see the largest growth in assets, says Roger Urwin, a leading pensions investment expert, as he published research today showing a fall in fund values for the first time since the financial crisis. Annual research by Willis Towers Watson, an investment consultancy where Urwin is global head of investment content, shows the value of assets in the world’s 300 largest funds fell by over 3% in 2015 to US$14.8 trillion (€13.3 trillion). Only hybrid plan assets grew, by almost 14%, while all other fund types declined: defined benefit -5%; defined contribution over -2%; and government reserve funds -0.3%. Urwin said it had become clear that good investment governance is the “key determinant” in producing the competitive edge necessary to fund schemes and pay benefits securely. “There has been a fair amount of movement in the ranking in the past five years with winners likely being determined by having fully diversified portfolios that perform well in times of stress and a focus on total rather than relative returns. “Another differentiator of leader funds is their ability to innovate or be an early adopter; critical in such a persistently low-growth environment.” Urwin added that an area where investors have embraced this to their benefit is in thinking innovatively about betas across all possible return drivers in their portfolios and balancing this with appropriate focus on capturing alpha. The ‘P&I / Willis Towers Watson Global 300’ showed that European pension funds had the second highest (4%) compound growth rate after the US (6%). Asia had 1%. ©2016 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.