UK - Hermes Fund Managers is rolling out a new investment office function, which it says will share with clients - at no extra cost - the same reporting seen by the trustees of the BT Pension Scheme, Hermes' owner.
In addition to quarterly reports, Hermes is also prepared to offer clients copies of relevant parts of committee minutes concerning teams and their strategies.
Saker Nusseibeh, head of investment at Hermes, described the new function, which is embedded in the CIO office at Hermes, as an internal consultant for the client and likened it to the central risk office of a large long-short hedge fund.
"The difference here is that the risk function is embedded in the CIO office itself and the CIO becomes part of it, so the alignment is entirely with the clients," he told IPE.
"Second, we are proactive, not reactive. We are looking at the client's own money as if it were our own book. For us, the book is not the firm - the client is the book."
Hermes, which manages assets of €30bn, has also developed its own internal, proprietary multi-factor econometrics model called multiFRAME and allocated dedicated risk management specialists, attribution specialists and fund managers to the investment office function.
Nusseibeh conceded the model could be copied by competitors, but he added that, if Hermes started losing "first-mover advantage", he would still welcome wider adoption.
"It is right that people should do it," he said.
He added: "The kind of structure we have put in place has to do with the way we think about the world.
"You also have to structure it so it is financially completely independent. It's not a service you sell and you are not linking the profitability to any bit of the business - you are doing it because you need to."
For more, see IPE's Focus on CIOs in the May 2011 issue.
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