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Cogent Reports: Diverse Selection Criteria Characterize New European Pension Mandates

Institutional investors prioritize different selection criteria for new managers across countries, which means winning new mandates will be contingent on providers understanding international business nuances. While US defined benefit investors indicate the most important criteria for selecting a new investment manager are organizational and trust factors, European pensions report heterogeneous decision drivers—from local presence in the United Kingdom to brand and reputation in France. These and other findings are included in the annual International Institutional Investor Brandscape®, a Cogent Reports™ study by Market Strategies International.

“This year, there is an increased opportunity for new manager additions, with roughly half of UK, Swiss and French pensions expecting to add new managers in the next 12 months,” said Linda York, senior vice president at Market Strategies and lead author of the study. “Many US-based asset managers may inadvertently focus on American values abroad, but it is important to focus on country-specific customs during proposals and final presentations.”

Further, local brands dominate mindshare among European pensions. Aviva Investors, headquartered in London, leads in unaided mentions among UK institutions as they seek to manage liquidity and protect their portfolios against inflation over the next year. Similarly, Swiss-based Pictet dominates among Swiss institutions focused on brand and reputation as they seek to increase allocations to eurozone public equities. As French pensions evaluate emerging markets and actively managed global equity managers, top consideration drivers include brand reputation and financial stability. Interestingly, US-based firms Vanguard and Invesco rival AXA Investment Management and BNP Paribas for the most unaided mentions in France.

US-based asset managers new to European markets may need to shift from an organizational focus of US-focused marketing and finals presentation materials. Strong investment performance and demonstration of a repeatable research process are consistently among top consideration drivers of European institutions.

Going forward, the UK referendum to leave the European Union, referred to as Brexit, is expected to be top of mind for European pensions. “Given the concerns for Brexit’s impact on UK and eurozone equities, European pensions may increasingly seek volatility management and reduction of home equity bias,” said Chris Barnes, managing director of the financial services division at Market Strategies International. “We will be paying close attention to these investment themes and their resultant opportunities in our 2017 study.”

 

About International Institutional Investor Brandscape

Cogent Reports conducted a phone-based survey of a representative sample of 800 defined benefit pension investors managing the equivalent of at least $20 million in assets in May 2016. Survey participants were required to play a direct role in the evaluation and selection of investments or asset managers within their organization. In determining the sampling frame for this study, Cogent Reports relied upon the Standard & Poor’s Money Market Directories (MMD) database of institutional investors. To ensure data are representative of the overall market, responses were weighted within each country/region based on information reported by local governments and other commercially available sources. Weighting was based on defined benefit pension plans’ asset amount. Due to the nature of sample availability in each country, it is impossible to compute a margin of error. Market Strategies will supply the exact wording of any survey questions upon request.

 

For more information on this study, download the fact sheet.

Download the Fact Sheet

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