Guide to Good Pensions: Investment Services edition

Welcome to the investment services section of the Guides to Good Pensions, the buyers guide helping you to spot the best performers in the pensions and investment industries.

The guides accompany the Pension and Investment Provider Awards, now assessing the performance, service quality and innovation of the market for the 22nd, and arguably most important, year.

In many cases, the particular challenges thrown up by 2020 meant that the best attribute of the advisory companies we rewarded in our scheme services guide was the offer of a steady hand. According to Pensions Expert reporting, many consultants and independent trustees’ main advice to lay trustees was to avoid panicking and knee-jerk reactions.

This meant that responsibility for navigating the Covid-19 pandemic and resulting market palpitations was placed squarely on the shoulders of incumbent asset managers. Changes to mandates will not be effected in many cases until this year — making the timing of our guides yet more significant.

The pandemic did offer sectors of the asset management industry under intense scrutiny the chance at redemption. As you can read in our sector-by sector commentary, some managed it, while others fell short.

We all know that equity markets made short work of erasing their losses, but this kind of market commentary is becoming of ever-decreasing use for pension scheme investors that are increasingly assessing performance in terms of outcome, both in defined benefit and defined contribution.

Scheme eyes are firmly focused on risks on the horizon. Environmental, social and governance issues are fast becoming the most significant factor when picking new managers. Correspondingly, and in keeping with the revelation that the majority of climate-themed funds are misaligned with Paris goals, our judges also found this to be the biggest source of manager marketing spin.

Likewise, a recent report found that DC rebounded similarly, with even the most equity-exposed default funds staying the course and enjoying strong performance as the market panic eased. More challenging to resolve will be the stagnation in auto-enrolment participation that accompanied the lockdowns.

The best entries reviewed by our judges more or less wrote themselves, because the managers in question were able to point to specific actions with a concrete impact, rather than simply tapping into the marketing zeitgeist.

To improve the quality and reliability of our analysis beyond the exacting standards set by the judges, we relied on independent third-party analysis, provided by ClearGlass, for the first time.

ClearGlass collects cost and performance data for a staggering 950 asset owners, including £1tn of mandates with 472 managers. That meant that our judges were able to quickly check whether the claims made by managers were borne out in the results delivered for their clients. Our thanks to ClearGlass, and its founder and chief executive Dr Chris Sier, for bolstering the reputation of the PIPAs.

All of the category roundups you will find below feature our analysis of the forces shaping each sector, a summary of the judges’ thoughts on the quality of the sector and entrants to the awards, and of course our winners and commended entries. Many also include profiles of the winning entrants, along with Q&As sharing insight from key spokespeople.

We have included entry requirements for the awards at the bottom of this article.

Further insight into the judging process can be gleaned by attending our awards ceremony with a difference, scheduled for October 14. A panel of judges will dive into what makes a successful entry, while the broader theme for the event is ‘resetting the pensions agenda’.

Our speakers include familiar faces such as Lord David Willetts, influential voices from abroad such as the divestment activist Bill McKibben, and FT analysis from leading journalists Chris Giles and Josephine Cumbo.

You can read more about our process and judging criteria below, or click on a category to dive into our analysis of individual sectors.

Welcome to the investment services section of the Guides to Good Pensions, the buyers guide helping you to spot the best performers in the pensions and investment industries.

The guides accompany the Pension and Investment Provider Awards, now assessing the performance, service quality, and innovation of the market for the 22nd, and arguably most important, year.

In many cases, the particular challenges thrown up by 2020 meant that the best attribute of the advisory companies we rewarded in our scheme services guide was the offer of a steady hand. According to Pensions Expert reporting, many consultants and independent trustees’ main advice to lay trustees was to avoid panicking and knee-jerk reactions.

This meant that responsibility for navigating the Covid-19 pandemic and resulting market palpitations was placed squarely on the shoulders of incumbent asset managers. Changes to mandates will not be effected in many cases until this year — making the timing of our guides yet more significant.

The pandemic did offer sectors of the asset management industry under intense scrutiny the chance at redemption. As you can read in our sector-by sector commentary, some managed it, while others fell short.

We all know that equity markets made short work of erasing their losses, but this kind of market commentary is becoming of ever-decreasing use for pension scheme investors that are increasingly assessing performance in terms of outcome, both in defined benefit and defined contribution.

Scheme eyes are firmly focused on risks on the horizon. Environmental, social and governance issues are fast becoming the most significant factor when picking new managers. Correspondingly, and in keeping with the revelation that the majority of climate-themed funds are misaligned with Paris goals, our judges also found this to be the biggest source of manager marketing spin.

Likewise, a recent report found that DC rebounded similarly, with even the most equity-exposed default funds staying the course and enjoying strong performance as the market panic eased. More challenging to resolve will be the stagnation in auto-enrolment participation that accompanied the lockdowns.

The best entries reviewed by our judges more or less wrote themselves, because the managers in question were able to point to specific actions with a concrete impact, rather than simply tapping into the marketing zeitgeist.

To improve the quality and reliability of our analysis beyond the exacting standards set by judges, we relied on independent third-party analysis, provided by ClearGlass, for the first time.

ClearGlass collects cost and performance data for a staggering 950 asset owners, including £1tn of mandates with 472 managers. That meant that our judges were able to quickly check whether the claims made by managers were borne out in the results delivered for their clients. Our thanks to ClearGlass, and its founder and chief executive Dr Chris Sier, for bolstering the reputation of the PIPAs.

All of the category roundups you will find below feature our analysis of the forces shaping each sector, a summary of the judges’ thoughts on the quality of the sector and entrants to the awards, and of course our winners and commended entries. Many also include profiles of the winning entrants, along with Q&As sharing insight from key spokespeople.

We have included entry requirements for the awards at the bottom of this article.

Further insight into the judging process can be gleaned by attending our awards ceremony with a difference, scheduled for October 14. A panel of judges will dive into what makes a successful entry, while the broader theme for the event is ‘resetting the pensions agenda’.

Our speakers include familiar faces such as Lord David Willetts, influential voices from abroad such as the divestment activist Bill McKibben, and FT analysis from leading journalists Chris Giles and Josephine Cumbo.

You can read more about our process and judging criteria below, or click on a category to dive into our analysis of individual sectors.

ClearGlass is a technology company that gathers data from asset managers to calculate the value for money they provide to institutional asset owners.

Data collected includes cost and performance data (using the Cost Transparency Initiative framework), as well as information on manager transparency, fund holdings and quality of manager client service.

Data is collected at the request of institutional asset owners, can be viewed in isolation or via benchmarks, and is of enormous benefit to both asset owners and asset managers.

It allows institutional asset owners to independently prove to their stakeholders (DB corporate sponsors, pensioners, the Pensions Regulator) that the managers they use provide good VfM; to renegotiate fees where they are out of line with benchmarks and therefore reduce costs; and to identify new managers that are able to provide the desired VfM.

Conversely, the same data allows managers to prove their true VfM, to identify clients-at-risk and take targeted remedial action, to better understand the market trajectory of cost, performance and other factors, and to attract new clients seeking better VfM.

Dr Chris Sier, founder and chief executive, ClearGlass

Dr Chris Sier, founder and chief executive, ClearGlass

PIPA investment services categories – entry requirements

A section on performance should clearly state the performance of any funds to be considered for the awards, on a net-of-fees, annualised basis for one year, three years and five years leading up to December 31 2020. Additional metrics (such as measures of risk-adjusted return) are welcome, but any entrants failing to meet our basic demand will be automatically disqualified if a mitigating statement is not provided. This section should explain how fund managers’ approach to risk, opportunities and costs helped clients achieve their objectives.

A section on innovation should look at the changes introduced to improve outcomes for clients over the year, and should be specifically linked to the funds being entered. Claims of ‘ESG integration’ must be backed up by evidence, including details of voting and stewardship activities where appropriate.

A section on service should indicate how the manager helps its clients solve the problems they face, and may include anecdotes of when the company has gone above and beyond in the name of client service. What market initiatives are you taking on board, and how are you supporting them?