Fiduciary Management. What it should deliver to your fund

Size: px

Start display at page:

Download "Fiduciary Management. What it should deliver to your fund"

Barnard Sparks
8 years ago
Views:

1 Fiduciary Management What it should deliver to your fund

2 The Concept Fiduciary Management is a comprehensive investment management service which enables institutional investors to realise their strategic targets in a responsible manner while maintaining control over their fund. Key components: Solvency / balance sheet management Comprehensive portfolio management Clear investment beliefs in implementation Strong risk management Dedicated relationship management Alignment with clients 2

3 Solvency / balance sheet management Investments are a means to an end Define target excess returns and risk budget versus liabilities Targets depend on solvency level: Tradeoff between improving solvency and risk of insolvency Higher solvency levels: more focus on real liabilities Portfolio construction based on scenario analysis Fiduciary manager is an advisor. Pension fund stays in control, is endresponsible 3

and risk of insolvency Higher solvency levels: more focus on real liabilities Portfolio construction

4 Comprehensive portfolio management FM manages the portfolio on a pension fund level, using building blocks provided by the fiduciary manager or third parties Dynamic risk allocation based on solvency level, risk budget en investment view Research driven by global network of investment professionals Managing matching portfolio s versus liability benchmark Safeguarding professional implementation of all elements in the portfolio 4

budget en investment view Research driven by global network of investment professionals Managing matching

5 Clear investment beliefs in implementation Multi-manager implementation, top quality selection and monitoring process Responsible investment as integrated part of investment process Active risk allocated based on characteristics of asset class Alternative Investments done right for pension funds Risk profile should match funds risk appetite Responsible in investment style and fees 5

risk allocated based on characteristics of asset class Alternative Investments done right for

6 Strong risk and compliance management Risk management within processes Client portfolio risk management Investment risk management Operational risk management Risk control with business knowledge 2nd line of defense Compliance management for regulatory compliance of the fund 6

Operational risk management Risk control with business knowledge 2nd

7 Dedicated relationship management, transparent reporting Account managers with in depth investment expertise Dedicated client teams: Account Manager Client Portfolio Manager ( delegated CIO ) Investment Strategist Analist Client teams define mandates for product lines Transparent reporting on asset allocation, risk, performance and implementation 7

delegated CIO ) Investment Strategist Analist Client teams define mandates for product

8 Alignment of interests Avoid conflicts of interest where possible Fee schedule Fiduciary management covers a broad range of services Performance related fees should go beyond alpha in portfolio Fiduciary management is a strategic partnership Soft criteria (customer satisfaction etc) are part of a regular performance evaluation 8

should go beyond alpha in portfolio Fiduciary management is a strategic

9 Potential benefits for a pension fund Improved control: Strong risk management organization at fiduciary improves control Transparent reporting increases insight in return, risk and allocations and helps the fund to have better control on their investments Customized: fiduciary manager fully understands the fund s situation and can use that knowledge for professional implementation end-to-end Professional implementation across all asset classes This results in better overall performance Mn Services clients outperformed WM NL universe on a 5 year basis with 3,3% on average Average outperformance of Mn Services clients against WM NL universe 1,7% in

can use that knowledge for professional implementation end-to-end Professional implementation across all asset classes This results in better overall performance Mn

10 Keytakeaways Fiduciary management can help pension funds improving governance, risk control, quality of implementation and ultimately returns As a pension fund you should look for: Proven track record of fiduciary management Dedication to your fund in the organization Strong risk management Fee alignment on all elements of the service 10

should look for: Proven track record of fiduciary management Dedication to your fund

A Different Kind of Wealth Manager

A Different Kind of Wealth Manager BNY MELLON WEALTH MANAGEMENT OFFERS THE POWER OF A GLOBAL investment leader, the stability of 230 years experience, and the care and commitment of a wealth manager dedicated