South of England-based aerospace manufacturer Deutsch has replaced asset management giant Mercury with smaller City investment house Singer & Friedlander for its £7m ($12m) pension fund.
Deutsch chief executive officer David Burt says: With Mercury we felt we were one of many clients."
Tom Nash head of UK pension funds for Singer & Friedlander Investment Management, which has £2.6bn under management, says that the fund had decided to leave Mercury's pooled management service and arrange the portfolio on a discretionary balanced basis.
He adds: "Deutsch wanted more involvement with their fund manager and because of their size decided to cast their net outside the usual suspects."
The portfolio will be about 80 to 85% in equities, with bonds and cash making up the rest. The benchmark is the CAPS universe excluding property, but without a specified margin of performance.
He believes that with pension fund now subject to the minimum funding requirement and increasingly using customised benchmarks, there could be a move away from the pooled approach. "If managers are not providing segregated portfolios, it makes it very hard for funds to comply with the requirements. We can position portfolios properly ad tactically manage them."
Smaller scheme sponsors can find that the larger managers keep increasing the minimum size at they will run segregated portfolios, says Nash. "We have shown that we can offer good performance, over a long period at a reasonable cost."
Nash says that those in unit trust portfolios with the main managers often "do not get proper attention, suffer poor performance and face high charges". Singers is in discussions with a number of funds in this situation, says Nash.
Deutsch was advised by Robert Fleming Benefit Consultants. Fennell Betson"
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