(May 29, 2012) — Investment consulting firm Towers Watson has been appointed Delegated CIO and Scheme Actuary to a United Kingdom pension fund, taking its assets in this sector to over $50 billion.
The University of Warwick Pension Scheme awarded the mandate to look after its £120 million fund in terms of actuarial advice and investment strategy implementation, the company announced today.
Chris Ford said: “Our Delegated Investment Service addresses the gap between the capabilities of the largest schemes with internal management resources and the governance capabilities of more typical schemes. A delegated solution provides effective execution enabling pension schemes to employ investment strategies that are appropriate for today’s complex and volatile markets, and leaves trustees free to concentrate on the more critical strategic aspects of the management of their scheme.”
This approach, followed by many investment consultants, sits in direct competition with the services provided by asset managers. This has led to a turf war and fund houses setting up their own take on consulting services in the shape of multi-asset and other options that estimate and align liabilities with investments.
This year Towers Watson has announced several mandates to act as Delegated CIO for UK pension funds including car makers Jaguar and Land Rover. One of the first mandates of this type was also bagged by the firm: in 2008 the Merchant Navy Officers Pension Fund appointed the firm to a delegated consulting role. This was followed by the appointment of fellow consultant Hymans Robertson to monitor the work carried out by Towers Watson in 2011.
These funds have billions of pounds in assets, unlike the smaller University of Warwick scheme.
Ford said: “This appointment also shows how a flexible delegated service can be effective and relevant for funds with £100 million of assets as well as for funds with over £3 billion of assets.”
A survey published today by consulting firm Aon Hewitt found delegation of investment activity by mid-size pension funds was expected to rise.
The survey said: “Delegation to professional advisers of aspects of investment is still a minority activity but is expected to become more widespread. Some 10% of respondents delegate manager selection to advisers already, with a further 13% likely to do so in the future. Some 5% delegate their entire strategy to advisers and a further 12% are likely to do so.”