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Greater Diversification on the Agenda at Aon Hewitt’s Annual Fund Manager Conference

Posted on 24 Apr 13 by Annie George

Over 165 fund managers with a combined AUM of £14 trillion attended the annual conference held by the investment consulting practice of Aon Hewitt, the global talent, retirement and health solutions business of Aon plc.

The conference, held last week, offered Aon Hewitt the opportunity to share its observations on the markets, trends in fund management and institutional investment, while also taking in the views of the fund management community.

Lennox Hartman, global head of fixed income research, at Aon Hewitt said:

“The calibre of delegates attending our annual conferences continues to be very high. This year the theme of searching for yield and diversification took centre stage, driven by the continuing trend away from equities and into fixed income and alternatives.

"The extent of those sentiments will be soon be revealed, as our annual conference also gives us the chance to take soundings from the fund manager community and we will be issuing those survey findings over the next few weeks."

Key topics discussed by Aon Hewitt consultants at the conference included:

On the Public Sector

Emily McGuire, head of Public Sector Investment Consulting at Aon Hewitt, said:

"Views among public sector schemes are changing. We are already hearing consideration of flight path approaches, an increased appetite to learn about Liability Driven Investment and a continuing trend towards diversification.

"We also expect to see more interest in infrastructure, hedge funds and diversified growth funds this year, as public sector schemes – like those of the private sector – seek greater value at a time when it can be elusive.

But it's not just investment and asset allocation issues that are at the forefront of their minds, governance reviews and the debate around merging LGPS Funds are also on their agenda."

On Delegated Investment

Ian Bailey, co-head of Delegated Consulting at Aon Hewitt said:

"Delegating investment decision-making has become a 'normal' activity for trustees.  Over the past year we have seen the mood change from 'why should I delegate', to 'who should I delegate to?'

"As a result, the UK delegated investment team at Aon Hewitt has seen strong growth with the majority of that coming externally, via competitive tenders – we now look after $8.2 billion.  Nor is delegation just for private sector defined benefit schemes – we are now seeing interest from other pools of institutional assets."

On Insurance-based assets

Zuhair Mohammed, head of Aon Insurance Asset Solutions & Corporate Investment Advisory Business, said:

"As awareness grows that the skill set of investment consultants can be transferred for use with insurance companies, we are seeing much more interest in helping with setting investment strategies and in risk management services as well as in selecting asset managers and providing execution services.

"As we go through 2013, I expect that awareness to develop into a real trend, with increased outsourcing of asset management, wider bond mandates and increased use of alternative asset classes.  I also expect that we will see increased demand from fund managers to help them to offer services to the insurance sector as they no will no longer have to build in-house insurance expertise."