Rosalind Mann has joined Schroders as part of its UK strategic solutions team. She joins from Towers Watson, where she was an investment consultant for the past five years. Mann will join a team of six reporting to head of UK strategic solutions, Mark Humphreys.
What are your priorities for the role?
My role is to support Schroders in its discussions with pension schemes about their investment strategies. Traditionally, relationships between institutional investors and their investment managers have tended to focus on specific investments in isolation, but clients can add a lot of value by broadening these discussions to include wider strategic issues. My goal is to use the experience I have gained from my investment consulting background to support the services that Schroders offers in this area.
What are the main issues facing institutional investors at the moment?
One issue that has been frequently discussed in recent months is what investors should do about their bond holdings following a decades- long rally in bond prices. Most institutional investors hold bond-like assets for risk management purposes, but it is important to manage these portfolios carefully so that they provide the level of protection that investors need without being unnecessarily costly. More widely, since the credit crisis, markets have been very volatile and often driven by changes in investor sentiment and government or central bank policy. This environment makes it especially difficult for institutions to decide how much risk to take and where to take it. The speed at which markets can change is also a challenge for institutional investors, who may not have the governance in place to act quickly.
How should they address these?
During the bond rally, benchmark-constrained fixed income investments performed very strongly, and many institutions have large allocations to this type of strategy. We believe investors should consider a smarter approach which combines less constrained strategies with a separate liability matching portfolio. The recent volatility in markets has highlighted how important it is for investors to have a defined set of investment objectives and a clear framework for deciding how much risk to take. A clearly defined decision-making process can help investors to take risk when they can best afford it, and act swiftly to avoid missing opportunities in markets. An example of such a framework is a “flight path” solution for pension schemes, which reduces the level of investment risk as the scheme’s funding level improves.
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