Editorial: Nothing new under the sun

These questions were the focus of a Twitter conversation I had last week with @glenmac45 last week about our case study on the Royal County of Berkshire Pension Fund’s approach to investment in Africa.

Exasperated that a “60 yr old technique” – spreading investment to reduce volatility, even at this investment frontier – was considered newsworthy, our reader asked: “Do we not progress in finance, ever?”

This reminded me of our latest roundtable discussion of multi-asset investment funds, to be published this month.

Whether you call them multi-asset or diversified growth funds, often the charge has been that these are just balanced funds under another name.

This does a disservice to some of the thinking in the market, but you can see where cynics are coming from.

Last week we reported on another local authority fund continuing the oscillation between schemes’ passive and active management of their equity holdings.

At different times, the merits of one or the other will be preferred, but the change will not be groundbreaking, even if the right move at that moment.

An obsession with the new can hardly be the basis for a measured investment strategy; ideas will come back around in pension fund investment. At the same time, the lessons of the past can give us a clue to the mistakes of the future.

The loss of love for fund of funds strategies has had a lot to do with the costs gobbled up by the double-level fee structures.

But now schemes are launching into delegated consulting or fiduciary management contracts that may involve levels of fees they may come to regret, if they are paying substantially for another layer of management of their assets.

Schemes need to be quicker to grab new market opportunities, the argument goes. But more attention needs to be paid to the cost of that advantage.

Ian Smith is editor of Pensions Week. You can follow him on Twitter @iankmsmith and the team @pensionsweek.