UK – Aon Consulting, the pension fund investment consultancy arm of major Chicago based Aon Corporation, is to launch a new investment management company later this year, Aon Asset Management, which is expected to have between £500m (€815m) and £1bn (€1.6) in assets under management by the end of the year.

The new company will be an open ended investment company to be registered in Dublin but operate from London as a manager of manager. Clients will be able to invest in a range through specialist funds, including UK ,US, Pacific Rim and European equities. There will be a cash fund and a gilt or corporate bond fund either immediately or at a later date. The fund range will be extended to include alternatives such as private equity and property. Each fund will have two or more managers, says Aon.

“We have the full backing of our parent company in the States and it’s now a matter of getting the regulatory aspects sorted out,” affirms Chris Erwin, investment principal at Aon in London.

“The initiative is basically in response to increasing pressure form our clients that we should take more responsibility beyond just manager selection advice and from the Myners’ report that suggests that consultants need to be more accountable,” comments Erwin. He says that this is because the investment process is becoming more and more complex, particularly in the UK where people are moving to benchmark specific schemes as recommended by Myners and this is making manager selection a more complicated and time consuming process.

Erwin points out that Aon already has the backing of several large, though undisclosed, UK pension funds. He believes that smaller funds will continue to use Aon for the basic consultancy services, whereas the new manager service is likely to attract medium as well as larger sized schemes.

The services will be aimed initially at UK pension funds and Erwin stresses that they will be offered as an alternative to, not a replacement for, their existing consultancy work. “Investments have become more complex for trustees in the UK and given the Myners’ report, it’s higher on the agenda here at the moment.”

Any suggestions that the hitherto independent nature of Aon’s investment advice might be compromised are dismissed. “We will tell people that we have the two services available. Trustees are quite able to decide for themselves what they want. To suggest that there is a conflict of interest is frankly insulting their intelligence. It’s entirely up to them,” says Erwin.

Topics