Archive 2010

There is currently a very public, and at times acrimonious, debate taking place on the relative merits of "stimulus" and "austerity". But this debate is phony as nobody who is actually in a position to formulate policy is remotely suggesting real austerity.

Glyn Jones, Chief Investment Officer at P-Solve, the specialist investment consultancy and asset management business part of the Punter Southall Group, comments on why this debate is no more than an illusion:

• Nobody in a position to formulate policy is suggesting the imposition on society of anything like real austerity.

• With a new coalition government, and a new age of financial responsibility, the new forecasts claim that borrowing will now rise by a mere £454bn (instead of £567bn as previously thought). And we are told this is due to austerity: Who is this communication aimed at?

• John Maynard Keynes backed austerity in the good times to fund spending in the bad, "The boom, not the slump, is the right time for austerity at the Treasury".

• Austerity and prudence were absent in recent boom times and the financial crisis found the developed world needing large-scale public stimulus on top of an already precarious debt position.

• Austerity measures will only work if sufficient economic growth is generated before savers lose their appetite for sovereign debt.

• However, private sector deleveraging and stalling demographics in many developed countries suggest future growth will be sluggish at best.

• Introducing proper austerity in a slump causes real people to suffer in order to preserve the value of savers' capital.

P-Solve, the specialist investment consultancy and asset management business, today announced that its Fiduciary Management AUM has surpassed the £2bn mark. Fiduciary Management, P-Solve's delegated management service, now has a total of £2.015bn in assets.

As one of the first advisers to offer fiduciary management to the UK marketplace, P-Solve has won fiduciary management mandates from 43 UK pension funds since establishing Fiduciary Management in 2003.

P-Solve can also now reveal that during the credit crunch (from May 2007 to December 2009), Fiduciary Management significantly outperformed both the equities* market and a diversified static portfolio** yet delivered a lower level of volatility. Whilst equities yielded -5.1% with volatility of 19.5% and a diversified static portfolio period returned 1.9% with a volatility of 11.5%, Fiduciary Management delivered returns of 19.6%, with a volatility of only 10.4%.

Paul Kemmer, Head of Asset Solutions at P-Solve, said:
"P-Solve has reached this major milestone due to strong investment performance, increasing inflows and new client wins. This landmark demonstrates UK pension funds' increasing belief in the fiduciary model. A pioneer of fiduciary management, P-Solve is the only investment consultant to boast a proven track record of outperformance throughout the financial crisis.
“Our latest performance figures are a testament to P-Solve's team of 100 investment professionals that produce equity-like returns at much lower risk. By actively managing the investment decision making process, we are able to act fast when we spot opportunities in the market. This has proved highly successful in the last three years and the growth in our AUM reflects this."

Explaining P-Solve’s asset allocation strategy, John Conroy, Managing Director of P-Solve, said:
"Pension funds' investment strategies have been flawed for too long, with a focus on peer benchmarking and a lack of diversification. P-Solve’s liability-led investment approach is aimed at directly improving a scheme’s funding position. An appropriate asset allocation strategy combines a 25-30% equities split between naked equity and shaped equity with capital rotation across asset classes, to maximise investment opportunities as market conditions change. The crucial element of these building blocks is the use of liability management through hedging techniques, focusing on the delivery of absolute returns."

* Equities refers to a composite index of 15% FTSE All-Share Index and 85% MSCI World Index
** Diversified Static Portfolio refers to a composite index made up of indices from the following asset classes: 40% equity indices, 10% UK bond index, 25% broad bonds, 10% UK property, 5% commodities, 10% alternatives, 0% cash

P-Solve, the specialist investment consultancy and asset management business, today announced the appointment of Martin Ross to its P-Solve Asset Solutions team, which provides consulting and investment services to UK pension schemes.

With over 130 clients and over £5 billion assets under management, P-Solve Asset Solutions has a 7.5 year track record in fiduciary management. Martin's appointment is a continuation of the growth of the business, which has won fiduciary mandates from 43 UK pension funds since 2003.

Martin joins P-Solve as an Associate Director in a newly created role responsible for the strategic use of systems and processes. The role has been created as part of P-Solve’s commitment to continually improve its ability to deliver leading edge investment thinking efficiently to its fiduciary management and advisory clients. Martin will report to Paul Kemmer, Head of Asset Management at P-Solve.

Martin brings broad experience of designing and delivering business-enhancing solutions for financial companies in Europe, the US and Asia to P-Solve. Prior to joining P-Solve, Martin was in project strategy at Temenos, the leading supplier of packaged banking software and supplier of 'Wealth Manager', P-Solve Asset Solutions' portfolio management system. Before this, Martin was Associate Director at Financial Objects plc.

Martin holds an MA in Philosophy from the University of Cambridge.

Commenting on Martin's appointment, Paul Kemmer, Head of Asset Management at P-Solve, said:
"Martin will be a great addition to the team and his entrepreneurial background will fit in well with the spirit of P-Solve. Martin brings a wealth of experience, both commercially and in terms of IT, where he can immediately bolster our capabilities.  With his support we will be very well positioned to respond to the increasing demand from our clients for a range of consulting and fiduciary management solutions."

P-Solve, the specialist investment consultancy and asset management business, has announced the promotion of Ben Clissold to Deputy CIO (Chief Investment Officer), reporting to Glyn Jones, CIO. Ben will continue to expand P-Solve's capabilities in the design and implementation of bespoke investment solutions, while helping to steer the overall investment strategy of the firm.

Ben's promotion follows the return of Andrew Drake as Managing Director and the appointments of Kevin Haywood to the Investment Advice team and Callum Webb, Geoffroy Sauvé and Mikhail Tikilyaynen to the Risk Management Solutions team.

Since its inception in 2003, P-Solve Risk Management Solutions has implemented over £16 billion of derivative based solutions and is currently advising on an additional £10 billion of assets. With a team of 22 experienced practitioners, P-Solve has over 70 clients or 60% of its total client base utilizing its risk management solutions' expertise.

Ben comes from a derivatives trading background, having worked at the Canadian Imperial Bank of Commerce (CIBC) and at ING trading in European and Far East markets. 

Commenting on Ben's promotion, Glyn Jones, CIO of P-Solve, said:
“Ben’s promotion to Deputy CIO signals our ongoing commitment to leading edge thinking in our investment business. A wide number of P-Solve colleagues contribute to our investment ideas and decision making, and I am very pleased that such a skilled investment practitioner as Ben will now become more involved in guiding this creative process. He brings a wide-ranging experience of financial markets and risk management to bear in his new role, which will stand him in good stead."

John Conroy, Managing Director of P-Solve, on what pension funds should do about returns.  He says the old model of depending on equity markets is gone because it is too risky.  The solution should involve dynamic asset allocation, and the goal should be absolute returns.

To view the interview, please click here.

P-Solve, the specialist investment consultancy and asset management business, has called for the industry to adopt a more forward-looking approach to the governance of pension fund investment strategies at its annual Investment Conference 'Tomorrow's World.'

P-Solve's Chief Executive Officer Mike Faulkner said it was essential to test investment strategies in the context of potential future economic scenarios, to avoid permanent damage to UK pension fund portfolios. Pension funds should look now at how their portfolios would fare if the global economy entered an inflationary environment, a "double-dip" recession, or any one of a host of other scenarios, however unlikely such outcomes might seem.

Mike Faulkner, Chief Executive Officer at P-Solve, commented:
"Buyers of advisory services should get what they require and deserve – not whatever 'one size fits all solution' that providers may have on offer. The key challenge facing the pension and investment industry is to look at once in a decade opportunities and major economic and structural trends, while assessing future economic regime change scenarios. If the industry can lead strategic thinking, participants can move from being reactive to proactive with investment strategy."

Thus far governance has been backward looking for too long with the pensions industry focusing its attention on assessing investment managers' past performance and analysing what went wrong. P-Solve's view is that buyers of investment advice must change: service providers to the pensions industry should prioritise thinking strategically and looking at systemic shifts in the economy of the future. Industry participants must spend more time thinking about big picture questions and less on box ticking.