The most important factors when it comes to appointing an investment manager

We asked respondents to identify their three most important factors when appointing a fund manager.

For DB schemes, trustees identified stability of the investment team as key, with 69% of respondents including this as a top three choice, followed by performance track record (59%) and fees (54%).

The view of the scheme consultant was one of the top criteria for 50% of participants, again showing the pivotal role played by investment advisers.

Client service was also important for half of the participants.

Trustees are less influenced by corporate reputation, with only 11% selecting this as a top three factor, or by total assets under management (6%).

However, when it comes to selecting a DC fund manager, fees are all-important, perhaps as a result of the default fund charge cap and greater pressure on boards to demonstrate value.

Seventy-two per cent of trustees included fees as one of their top three factors.

As with DB funds, performance track record (64%) and stability of the investment team (49%) were the next most significant factors, along with client service (49%).

When we asked respondents how investment managers could better assist them in their work as trustees, the replies were similar to those about investment consultants.

‘Transparency’ featured in 33% of answers, ‘performance’ in 16% and ‘fees’ in 14%.

Trustees also want fuller explanations of how investment managers are adding value and how their house views affect investment decision-making. Respondents also said the quality of investment managers’ reporting could be improved.

In addition to demonstrating valuead and reducing the amount of generic market commentary, independent trustees also said that they want less jargon in reports.

Research analysis - investment managers

To download the full Independent Trustee Research Report 2018 click here.

This research was carried out in association with Newton Investment Management.

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