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New pension fund trends

04 February 2004 Angelo Coppola

The influence of asset consultants and multi-managers increasingly affects the investment approach of local pension funds.

That's the reading of asset manager and unit trust company, STANLIB following an influx of R11bn worth of institutional mandates in 2003.

Dylan Evans, STANLIB's investment marketing director, ascribes the success to a growing tendency in the retirement fund industry to award specialist mandates to managers with specialist expertise.

In line with international trends, SA retirement funds appear to be moving away from the practice of awarding balanced fund mandates to a single manager. Instead, says Evans, they build their own balanced portfolios, employing the specialist skills of different managers in specific asset classes.

Awarding balanced fund mandates to a single manager has fallen out of fashion in recent years, as retirement funds seem to believe no single manager can perform equally well across all asset classes and equity sectors.

"This is a logical approach," says Evans, "driven by asset consultants and the multi-manager industry."

Other pension fund developments include:

* A reluctance to commit significant assets to absolute or real return funds, though some interest is evident.

* No evidence of a substantial reduction in equity exposure. STANLIB believes trustees chose to weather the equity downturn in early 2003 rather than sell at the bottom.

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