An increasing number of European pensions are planning to hire more asset managers than in years past, according to a recent study by Market Strategies International.
The report said the rise in activity is a sign that incumbent managers aren’t completely fulfilling expectations for diversification and increasing alpha. It also said that the greatest interest in hiring new asset managers is in the Netherlands, France, and the UK, where more than 60% of pensions said they plan to hire at least one new asset manager into the fold.
According to the report, more than 70% of European pensions mention BlackRock when asked to identify specific asset managers they would most likely consider hiring for new or existing mandates. BlackRock is even more popular in the Nordic countries and Germany, said the report, where as many as 90% of pension investors said they are interested in hiring the firm.
However, despite BlackRock’s dominance, the report says the private equity giant “faces some stiff competition” in the countries that are most likely to be adding new managers. For example, in the Netherlands, AB (formerly known as AllianceBernstein) is equal with BlackRock in terms of the highest consideration score, while in the UK, Goldman Sachs Asset Management edges out BlackRock with the strongest potential for new business. Invesco was the asset manager most firms were considering hiring in France, which was cited by the report as the European country where pensions report the highest likelihood of adding new managers.
“While the key criteria impacting new manager selection varies by country, we found that financial and organizational stability, product innovation, and local presence are common factors sought by European pensions,” said Linda York, senior vice president at Market Strategies, and author of the report.
The report was based on a telephone survey of a representative sample of 800 defined benefit pension investors managing the equivalent of at least $100 million in assets. Survey participants were required to play a direct role in the evaluation and selection of investments or asset managers within their organization. Weighting was based on defined benefit pension plans’ asset amount.