Fiduciary management outperformed during financial crisis, says P-Solve

UK - Fiduciary management has significantly outperformed both equities and diversified static indices during the financial crisis, with a lower level of volatility, according to P-Solve.

The specialist investment consultancy and asset management company said, from May 2007 to July 2010, fiduciary management outperformed both an ‘equity portfolio’ and a ‘diversified static portfolio’.

The equity portfoli refers to a composite index of 15% FTSE All-Share index and 85% MSCI World index, while the diversified portfolio refers to a composite index made up 40% equity, 10% UK bonds, 25% broad bonds, 10% UK property, 5% commodities and 10% alternatives.

P-Solve, one of the first advisers to offer fiduciary management in the UK, said equities lost -13.8% over the same period, while the diversified static portfolio was flat.

The company said it has delivered returns of 20.5%, with a volatility of only 10.6% - half that of the equity portfolio - since May 2007.

It also said it has won fiduciary management mandates from 44 UK pension funds since establishing its offering in 2003.

Recent wins include the pension schemes of Translinc, EGL, Jones Stroud and Brewin Dolphin.
 
P-Solve’s fiduciary assets have now surpassed the £2bn mark, as at 31 August.

Paul Kemmer, head of asset solutions, said: “P-Solve has reached this major milestone due to strong investment performance, increasing inflows and new client wins.

“This landmark demonstrates UK pension funds’ increasing belief in the fiduciary model.”

John Conroy, managing director, said most pension funds’ investment strategies had been “flawed for too long”, with a focus on peer benchmarking.

“An appropriate asset allocation strategy combines a 25-30% equities split between naked equity and shaped equity with capital rotation across asset classes, to maximise investment opportunities as market conditions change,” he said.

“The crucial element of these building blocks is the use of liability management through hedging techniques, focusing on the delivery of absolute returns.”