Merryn's Blog

Pension administrators take fund managers on at their own game

More and more pension funds are turning away from expensive fund managers and are bringing asset management in-house.

160111-money

I wrote last week about what might finally force the big fund managers to cut their fees. The FT today provides one more answer on top of the three I mentioned: it is the big pension funds losing patience.

According to research firm Foster Chase, 26 out of the UK's 37 largest pension schemes have decided to bump up their internal asset management expertise "in the belief that they can achieve similar returns at a fraction of the cost".

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So the Greater Manchester pension fund (the UK's largest local government scheme) has doubled the size of its in-house team, and Railpen says that it has already saved £50m by cutting the number of external managers it works with from 17 to two.

This, unsurprisingly, has "troubled fund managers" given that they have long taken pension assets for granted as being "a critical mass of assets from which they can leverage new products and opportunities."

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Not long now and fund managers might move from being "troubled" to offering better value in order to hang on to at least some of their old business.

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