There was disquiet at July's Fund Forum International conference in Monaco concerning the fund management industry's ability to cope with change and its impact on clients.

The mood reflected more what is apparently not happening rather than how to cope with new thinking and investment challenges. And with European pension reforms now blurring the boundaries further between retail and institutional business, there was talk suggesting investment offerings are not meeting client demands.

Helena Morrissey, chief executive at Newton Investment Management, echoed such comments during a discussion about the blurring boundaries of the pension fund market. She questioned why the fund sector does not engage more with pension fund clients and find out what they really want as service and product offerings."While things are changing clearly in terms of what clients want, the fund management industry has not done a great job of working with clients to understand they changing needs," said Morrissey.

"CREATE [research] found clients want to go back to basics, global equities are their priority. We need to do a better job of discussing with our clients what they want. We also have to do a better job of talking to the consultants because they are also afraid of getting involved in our strategy," she added.

It seems the communication problem is not all one-sided, as fund managers want to engage with investors but are apparently frustrated at the lack of opportunity to do so. Pension funds and consultants, Morrissey again argued, simply don't ask questions of asset managers who do want to share their insight and add value.

"It is incumbent on the [pension fund] client, where the consultant is very powerful, to say we like your advice but we also want the opinion of the fund manager. If we go to a meeting of trustees, we are not asked to contribute to their strategy. Even if they don't listen, they should be asking and I would like to see more of that," added Morrissey.

Such discussions at the Fund Forum appear to signal a wider problem in general across the investment sector. CEO forums, for example, played down any immediate need to move from long-only strategies and engage in hedge fund or shorting products.

Yet traditional fund managers sought to stress their teams now operate within internal ‘boutique' environments delivering a range of skills and knowledge.

One of the most popular breakout sessions of the entire conference looked at the growth of 130/30 products and an apparent demand for access to these strategies by retail investors.

While 130/30 is being interpreted as an exact definition of how the products work, consensus suggested another label may be needed to reflect what is really a "prescriptive technique", given positions can move as little as 105/5 up to 150/50.

Elsewhere, the concept of absolute returns took quite a battering throughout discussions on the back of general recent poor performance, at one time described by High Willis of Bluebay Asset Management as "still not delivering anything more than traditional alpha". And yet the search for alpha has become the focal point of the entire fund management industry.

One of the more interesting presentations came from Dr Horace Brock, an academic and founder of Strategic Economic Decisions, who presented brief details of a paper soon to be published suggesting in a market where everyone has access to the same news and information, there are logically only three ways to add alpha.

The only ways to add alpha, he suggested, are to "exploit the existence of structural change, exploit market misbehaviour, such as short-term market volatility and long-term cycles, and exploit logical errors of inference about how the economy and markets actually work".

Moreover, active management will become increasingly important, said Brock, as indexed household growth will diminish over the next decade and a nation's wealth growth will need to be four times that of GDP just match the true value of GDP. In order to achieve even 8% return, new asset classes and thinking will be needed to look beyond data crunching.

Data may look good on paper, according to Brock, but a manager benchmarked against everyone else still has to use their own intelligence to know "when to get off".

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