Most fund managers retain mandates for over 5 years

Most pension schemes review their fund managers’ performance at least every quarter, but retain their managers for at least 5 years, according to a new study of short-termism published today by the National Association of Pension Funds (NAPF) and the Investment Management Association (IMA).

Among the survey’s key findings were:

• three out of four pension scheme respondents said their principal fund manager had been managing their current mandate for at least 3 years, and 39% had retained their manager for more than 10 years;
• fund managers’ performance was reviewed regularly, but nearly all schemes preferred to measure performance against rolling year - or longer -  periods;
• investment performance was cited by IMA members as the most common topic for client meetings or reports;
• more than three-quarters of mandates had been in force for at least three years, according to IMA members;
• nearly two thirds of IMA members felt the structure of mandates led to an unduly short-termist approach, whereas only 29% of NAPF members agreed with the proposition.

NAPF Chief Executive, Christine Farnish, said:

“Clearly, there is no evidence that fund managers are sacked on the basis of short-term poor performance. The survey indicates that pension funds are maintaining and building-up long-term relationships with their investment managers.” 

The IMA’s Richard Saunders said:

“This survey sheds light on the way the market for pension fund management is working.  It is clear that relations between fund managers and their clients are resilient despite the upheavals in the market over recent years.”

-Ends-

Notes to editors

The NAPF and IMA commissioned MORI to conduct research among their members on their attitudes towards time scales used for measuring and evaluating fund performance. Between June 22 and July 3 2004, MORI conducted telephone interviews with 100 NAPF members and 40 IMA members.

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