Martin Johnson, Investment Director in P-Solve’s Risk Management Solutions team, considers how the Lehman Brothers default has changed the landscape for derivatives users as counterparty risk becomes more significant – looking at the resulting operational issues for institutions with derivative contracts in place and asking what company FDs and treasurers should now be considering, as well as next steps for trustees.
P-Solve Asset Solutions appoints Martin Johnson as Investment Director in its Risk Management Solutions business.
P-Solve's Managing Director, John Conroy recently gave his views on the UK's emerging fiduciary management market to Investment and Pensions Europe.
P-Solve Asset Solutions (‘P-Solve’), the specialist investment consultancy and fiduciary investment management firm, today announced that its Total Investment Governance Solution (TIGS) service has outperformed equities by 12.0% to deliver a return of 8.3% over the 12 month period to end May 2008.
TIGS is P-Solve's fully-integrated investment consulting and asset management offering for pension funds and institutions wishing to delegate their investment decision-making to a third-party manager.
P-Solve have been pioneers of Fiduciary Management in the UK market place since winning their first client in 2003. P-Solve now have 36 UK pension schemes with assets of over £1.6 billion and TIGS will celebrate its 5th Anniversary at the end of October 2008.
The investment management side of the offering is a liability led investment service so P-Solve are mandated to directly improve a scheme's financial position. As well as liability hedging a key feature is the rotation of capital through different investments as market conditions change using the full range of asset classes available.
The main period of stress since P-Solve has been running the strategy has come since the start of the credit / liquidity crunch. The table below demonstrates how the strategy has done in these difficult market conditions versus equities and cash.
With the increased complexity surrounding DB investment and growing competition from other providers, investment consultants are being forced to evolve their model or face an uncertain future. Jenny Blinch reports
Defined benefit investment consultants are feeling the heat: what used to be a relatively straightforward business with clear parameters has become a supremely complex and competitive one.
John Conroy, UK-based principal at P-Solve, put it this way: "Twenty years ago, investment consulting was easy: it was about trying to find next year's winning fund manager and then measuring how they did. All pension funds were assumed to be the same: they were young, rich, backed by an open cheque book and investing in markets that went up all the time."
"The fact of the matter is that [now] the clients’ problem is getting more complicated, [therefore] it's to be expected that the kinds of tools used in delivering the solution reflect that complexity. So, the [consultants] just have to be up to speed with the leading edge of the available tools, else they're not going to be able to service their clients’ needs."
At the same time, what had been a landscape of clearly marked territories belonging to the various defined benefit (DB) providers - custodians, consultants, actuaries, investment banks and asset managers - has become a more open playing field.
