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

Sponsored Profiles

SPONSORED FEATURE: Alternative thinking

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

SPONSORED FEATURE: Interest rate risk hedging: Swapping to other options

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

SPONSORED FEATURE: Why blockchain could be the fund industry’s next Ford Model T

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

SPONSORED FEATURE: Open architecture: In need of protection

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.

Roundtables

ROUNDTABLE: The issue is perception

Mar 21, 2017

Our panel discuss tax transparency, the elegance of private placement and why Jersey could do more to promote itself. Chaired by Tom Cowsill in Saint Helier.

ASSET SERVICING ROUNDTABLE: Under pressure

Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.