LONDON — Independent asset management boutiques are poised to benefit from a shift by U.K. pension plans to long-term, long-only, "benchmark lite" mandates and absolute return strategies.
U.S.-based firms are best placed to reap the benefits, local pension executives say, as U.K. boutiques are thin on the ground. Firms that are successful tend to focus on long-short strategies and struggle with capacity constraints, they said.
"Certainly in the U.S., it seems that there are more boutique managers around," said Roger Emerson, senior vice president tax and treasury at GlaxoSmithKline PLC, Brentford, England. "There is more choice and these firms are less subject to merger and acquisition activity which disrupts the business, so these firms are able to operate with more of a long-term vision. They are much more able to identify a certain investment style and stick to that style."
At Glaxo, Mr Emerson has worked with money managers running assets for the firm's £8.3 billion ($14.8 billion) U.S. and U.K. pension plans. He is also a member of the Marathon Club, a group of executives from leading U.K. pension plans with a collective £130 billion in assets that, through peer pressure, is trying to encourage U.K. pension plans to invest more money in long-term investment strategies.
The number of local money managers is perceived to be so small that some pension executives were reluctant to talk about managers they use in case those firms were flooded with money.
"We have all sought to find good quality managers and between us we have destroyed them by deluging them with assets," said Peter Dunscombe, investment adviser of the £6.4 billion BBC Pension Trust Ltd., London.