Seek Fund Manager Expertise for More Obscure Markets

11 June 2012 (PLANSPONSOREurope.com) - While emerging markets represent a compelling proposition, pension funds would be ill-advised to invest in more obscure markets without the aid of a skilled fund manager, according to Don Hanson, Trustee at the University of Manchester Pension Fund.

In the latest report from Clear Path Analysis, Hanson says in more obscure markets such as Mongolia and Vietnam he feels the only way in is through a fund.

“As these markets mature, a skilled investor would be able to find more opportunities into the market without needing a fund to do so. I do also agree that an average retail investor should not be entering into any of these markets without the aid of a fund.

“In my role within the Manchester University Pension Fund, which has roughly £300m, it is virtually impossible to invest without funds. This is because although we can have direct investment, ETFs etc. for bureaucratic reasons, we cannot easily use them.

“One reason is we have to take investment advice and the investment advisors for pensions of our size are the investment consultants of actuarial firms.

“They make it very difficult for a fund to go outside mainstream investing and so we have to go through funds. They are very uncomfortable if you try and talk to them about investing in equities directly or even using an ETF.

“The second hurdle is that the nature of our trustees, who are trade unionists, employees of the university, academics etc. most of whom have no investment experience makes them a very conservative group.

“They would be very nervous if I were to propose an investment in an emerging market or individual share.”

PLANSPONSOREurope Staff
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