European Pensions Jumping on ESG Bandwagon

Fact-Based Trends from Cogent Reports™    

European Pensions Jumping on ESG Bandwagon

If there were any doubt as to the appeal of Environmental, Social and Governance (ESG) or Impact Investing in the European institutional market, it can now be put to rest. In a recent survey of defined benefit pension investors, Cogent Reports found that three-quarters or more of European pensions are likely to incorporate ESG investing in their portfolios within the next year. Moreover, this strong interest in ESG investing is evident across pensions of all asset sizes. Yet relatively few European institutions say they have already incorporated ESG or impact investing in their portfolios, suggesting that the category is poised for substantial growth.

A recent article* reported that Europe now accounts for over half (53%) of the $22.89 trillion in global sustainable investment assets. If the European pensions have anything to say about it, that number will quickly multiply, providing a welcome source of new assets to investment firms specializing in this area. Of particular interest to asset managers should be pensions in Switzerland, Italy and the Netherlands, where Cogent found ESG investing earning the strongest appeal. Continue reading

The Key to Success in International Marketing? Location, location, location!

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For US-based asset managers seeking to grow their institutional business overseas, the challenges are many. Asset managers deciding where to focus their efforts, which investment solutions to offer and how to differentiate their brands from those of the established local firms are all critical decisions. But the one consideration that dictates all others is location—determining which countries or regions to target. And what better way to decide where to set up shop than to pinpoint where demand for new managers is greatest?

Earlier this summer, Cogent asked pension investors across Europe how many new asset managers they anticipate adding to their lineups in the next 12 months. Encouragingly, European pensions remain interested in adding new managers to their lineups. Compared with 2014, more institutional investors are likely to add at least one manager to their lineups in the coming year. Opportunity appears greatest in the Netherlands, France and the UK. Similar to the US market, $1 billion-plus institutions are primarily driving the increased interest in new manager additions in the coming year, lending fuel to the strategies of many asset managers that are focusing on the upper end of the institutional market. Continue reading

Asset Manager Alert: How NOT to Get Dropped by Your Institutional Clients

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The reasons for dropping a manager vary substantially among institutional investors in the US versus those in other countries, according to our new International Institutional Investor Brandscape study. In the UK and elsewhere in Europe, concerns over liquidity far outweigh all other aspects that institutional investors identify when dropping a manager from their lineups. According to the Financial Times*, liquidity issues are of particular concern in fixed income markets, and as a consequence, many asset managers are beefing up the skills and resources on their trading desks to more effectively identify suitable buyers or sellers on the opposite sides of complex fixed income trades.

Second to liquidity issues, European pensions cite lack of communication or responsiveness as a top reason for dropping a manager, signaling the importance of regular outreach and effective service teams in cementing client relationships. Planned shifts in asset allocation, investment team turnover and the desire to reduce fees and expenses round out the top five reasons for cutting a manager in the international institutional market. Continue reading

European Pensions Open to Adding New Managers to Their Lineups

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European Pensions Adding Managers to Their Lineups

This year, there is an increased opportunity for new manager additions among international institutional investors. Significantly fewer institutions are likely to add zero new managers to their lineups in the next 12 months when compared with two years ago. Organizations in the UK, Switzerland and France are most likely to anticipate additions to their lineup, expecting to add a mean of 0.8, 0.6 and 0.6 managers, respectively. How can firms seize this opportunity and increase their share of the market?

Number of New Managers Likely to Add in Next 12 Months

The criteria institutions use to evaluate asset managers before adding, or conversely removing, them from their lineups differ by country. To capitalize on the opportunities and maximize their consideration potential, asset management firms must ensure that they are meeting these criteria. Continue reading