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Strategy

Taking stock: what next for the early adopters of fiduciary management?

Taking stock: what next for the early adopters of fiduciary management?

By Pádraig Floyd
Tuesday 24th June 2014

The fiduciary management market in the UK has been growing steadily in recent years. The growth, has generally been steady – they’re certainly not pulling up trees – and according to KPMG’s annual survey into fiduciary management, the UK market stood at around £58bn in 2013 across 345 UK pension scheme mandates.

"[Trustees] should not be outraged or shocked by how badly [fiduciary managers] may have performed. As they become more aware and their sophistication increases, so the shiny superficial services sold to them will appear as just that."

Crispin Lace

This market has been concentrated among smaller schemes where the majority of deals have been done, though some larger schemes, such as the Merchant Navy Officers Pension Fund have been high profile proponents of the delegated chief investment officer (DCIO) model.

The fact there are a number of different models applied to the market has been a source of confusion says Remco van Eeuwijk, UK managing director, at MN.

The market is seeing continued interest but many schemes are discouraged because fiduciary management as a term has become synonymous with a full outsourcing of investment processes, which for many is a step too far.

“There is still no consensus on the terms used within this market,” says van Eeuwijk, “and it is scaring lots of trustees away from traditional fiduciary management, as they see it as a loss of control.

Onwards and upwards

The KPMG study distinguishes between full and partial delegation. Assets under full delegation equate to half the total figure (£29bn), or approximately 2.6% of the all UK defined benefit pension scheme assets under management (AUM).

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