(September 27, 2013) – Trustees are better educated and more willing to listen to new investment ideas than ever before, according to Oxford University professor Gordon Clark.
Speaking to journalists ahead of the Allianz-Oxford Pensions Conference, Clark rebuffed suggestions that the move from traditional asset allocation portfolios to using newer asset classes was being hindered by trustee boards.
“Trustees in the UK in particular have changed dramatically in the past 10 years,” he said. “The average trustee today is very conscious of the liability load.
“They’re younger, smarter, and more skilled today. The push into different asset classes is an obvious response to this.”
Clark’s view was supported wholeheartedly by Joanne Segars, chief executive of the National Association of Pension Funds.
“There’s much more willingness to look at a broader set of asset classes,” she said. “We’ve seen a lot of trustee interest around assets such as infrastructure.”
Clark also dismissed the idea that trustees as a whole still spent too much time on manager selection: a popular criticism of CIOs who struggle to get more sophisticated investment strategies signed off by the trustee board.
He said: “Everyone used to be in the manager selection game years ago, but today it’s less important. Strategic asset allocation is on the agenda for all.”
The bigger problem trustees had, Clark continued, was the short-term horizon pressures they faced at a time when they should be considering themselves as long-term investors.
“When you talk about strategy and asset allocation, you face questions about the liabilities they’ll face in 80 years alongside questions about the triennial evaluation,” he said.
“Which timeline they should be aiming at can be challenging: the triennial funding evaluation can sometimes get in the way.”
Clark was named as one of aiCIO’s Professors in February this year. The Australian georgraphy specialist arrived at Oxford in 1995, and has published papers on the governance and management of pension funds, the governance and management of sovereign wealth funds, and the behaviour of investors who are saving for retirement.
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