Global decisions key
A survey by consultant William M. Mercer finds increasing interest among multinational corporations in global co-ordination of their pension fund investments.
The survey found 53 per cent of respondents exercised corporate involvement in, or co-ordination of, local fund investment decisions.
The main areas expected to benefit from more global involvement are funding policies, investment strategy and performance monitoring.
About 93 per cent of respondents expected to be involved in co-ordination of performance monitoring in the next two years, with 91 per cent citing funding policy and 87 per cent investment strategies.
Robert Baker, European partner with Mercer, said: 'There is clearly a growing interest in global co-ordination, with activity levels due to rise sharply in the next few years.'
There are number of benefits that can accrue from global co-ordination of pension fund investments.
'Certainly, multinationals can gain significant benefits from co-ordinating their investment policies and manager selection.
'The buying power of a single, worldwide organisation can mean access to the best managers, for example, including specialist managers that would not normally be available, or affordable, to local plans,' Mr Baker said.
'We also know that some multinationals are going a stage further, and are already looking to create a single asset pool to manage investments for their pension funds worldwide.'
About 75 per cent of respondents are looking to oversee investment manager selection over the next two years.
However, custody received lower results, with only 68 per cent expressing interest in expanding this area in the next two years.
'The low proportion of companies involved in overseeing custody is surprising, given that co-ordination of monitoring and policy can be achieved much more easily from a common custody platform,' Mr Baker said.
The survey analysed the attitude of global pension fund providers towards different types of investment management.
About 57 per cent considered active management to have priority compared with 17 per cent who cited passive management.
Also, 59 per cent considered specialist managers more important to them than multi-asset managers.
Where passive management is employed, less than half the respondents did not distinguish between different geographical markets.
'This is surprising. In emerging markets, for example, active management can exploit inefficiencies in the market, while in more efficient and mature markets . . . there is perhaps a greater role for passive management.'
