POSTED: March 13, 2017
Economy | Finance

Assessing asset manager performance—Evolving new techniques

Report on a roundtable for industry professionals
March 2017

Assessing asset manager performance—Evolving new techniques | Roundtable Report
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Managing financial performance and risk over the long term has always been a central task for pension funds. Recent work by regulators and others has made clear that trustees have a duty to consider environmental, social and governance (‘ESG’) issues, in so far as they have a financial impact over the long term. Trustees already use relatively sophisticated methods or investment consultancy products to guide their initial appointment of asset managers, and these are largely designed to assess how well managers will perform over the long term and can take into account their effectiveness at monitoring environmental and social factors. However, once they have hired an asset manager, trustees still tend to revert to simple quarterly comparisons with a benchmark when assessing ongoing performance, and thus whether the asset manager should be kept or fired.  Naturally, this encourages short term decisions by the manager, and thus a loss of focus on environmental and social factors. This may in turn lead to a loss of value over the long term.

Hence there is a question as to whether and how trustees (of both defined benefit and defined contribution funds, but not specialised ethical funds) can assess and manage their asset managers more effectively. This is likely to involve both quantitative and qualitative techniques. One aspect of this question is how taking into account ESG issues fits within this wider process. Some funds, such as the Environment Agency Pension Fund, have used alternatives to portfolio valuation, but can funds with lower levels of commitment and resource move in this direction? If so, what is the best, feasible alternative to portfolio valuation, and how can we create trust in it?

A roundtable to discuss these issues was held on 13 March 2017, attended by representatives of pension funds, and advisory and asset management firms.


The roundtable discussion was organised by the Centre for the Understanding of Sustainable Prosperity and hosted by the Pensions and Lifetime Savings Association. For enquiries about the report, please email


A report from this Roundtable can be downloaded in pdf.

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