This content is from: Corner Office

Fund Managers Set to Battle for European Pension Mandates

BlackRock faces competition from firms such as Goldman Sachs and Invesco as pension plans prepare to add new managers, a survey found.

  • Joe McGrath

There’s a battle brewing among firms that compete to manage assets for European pension plans, according to a new survey.

More than 70 percent of European pensions said they are most likely to hire BlackRock for new or existing mandates, including more than 90 percent of those surveyed in Nordic countries and Germany, according to Cogent Reports’ 2017 International Institutional Investor Brandscape study. The firm probed 824 defined benefit schemes across Europe from June 19 to July 12.

Cogent found that appetite for adding new managers was strongest in France, the Netherlands and the U.K., where more than 60 percent of DB retirement plans intend to do so. It’s a sign that incumbent managers aren’t completely fulfilling expectations for diversification and increasing alpha, according to the report.

“We are always looking at who is the market leader and why. That is BlackRock,” Linda York, senior vice president at Market Strategies International and author of the report, said in an interview. “But, we are also looking at where there is an opportunity to break through, for a challenger brand to gain some market share from such a dominant player and we have found there certainly is that opportunity there.”

In the U.K., Goldman Sachs Group’s asset management unit topped the poll with 79 percent of pensions naming the firm as the most likely find manager to win a new or existing mandate. BlackRock and JPMorgan Chase & Co’s asset management arm tied for second place with 78 percent of the vote. PIMCO and Standard Life Investments also polled well among British defined benefit schemes, according to York.

[II Deep Dive: Alternative Asset Managers Have Poor Showing in Client Service Survey]

In the Netherlands, BlackRock tied with AllianceBernstein, or AB, with 85 percent of the vote. Invesco was the standout performer in France, with 88 percent of investors saying that they would most likely consider the firm for new or existing mandates, ahead of BlackRock which was named by 86 percent of those polled.

“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,” York said in a statement accompanying the Cogent report.