17th July 2018 Anna Copestake comments in Corporate Adviser on passive funds winning in the battle of price over value
According to corporate advisers, employers signing off fund choices for their defined contribution schemes have been so focussed on price that they are overlooking the potential value in well-run active management strategies.
Advisers went on further to explain that employers have been seduced into offering comparatively safe options with little sophistication, because the funds offer the cheapest price.
Some believe that things may change once DC schemes get to a size where they can command better terms for active strategies.
Anna Copestake explained that “Greater assets under management enable schemes to secure more favourable terms with providers and managers, leading to wider investment product opportunities – so growth may help.
“We see this with master trusts and larger schemes. With impending consolidation in the master trust market, due to the new authorisation regime, we may well see master trusts – as well as large schemes – continuing to break new ground.”
Read Anna’s comments in Corporate Adviser
The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. ARC Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.