Professional Adviser's investment detective Matt Morris delivers his verdict on key developments in the investment and pensions arenas from the last month or so
What dreams may come
After a merger deal between Pioneer Investments and Santander Asset Management fell through earlier this year, it has been announced French asset manager Amundi has bought Pioneer for £3bn, creating one of the world's largest fund managers, with £1 trillion in assets under management. Market-watchers have suggested the deal, which is expected to close in the first half of 2017, makes sense from an efficiency point of view but expressed some concerns over the kind of cost-cutting Amundi could deem appropriate.
Verdict: Promising lead
Spectre
The Retreat of Globalisation, Miton managing director Gervais Williams's latest book, has been published. It argues that while globalisation may have been running into headwinds for some time, few have appreciated it has already passed its high-water mark. The book goes on to suggest that, with the benefit of hindsight, we should now see events such as Brexit and the election of Donald Trump in the context of a new social and economic trajectory and that portfolio strategies may change more in the next three years than they have in the previous 30.
Verdict: Promising lead
Walk the line
Natixis' quarterly Portfolio Barometer report offers insights into UK financial advisers' model portfolios and asset allocation decisions. The latest report, analysing 103 model risk-rated portfolios managed by UK financial adviser and wealth management firms in the three months ending September 2016, made several notable findings. Sterling weakness continues to benefit advisers, having led to substantial gains in non-UK assets - specifically equities where advisers typically do not hedge currency risk - yet, the report warns, this may pose substantial risk in the years ahead. The report also noted a muted shift in equity allocations over the quarter, away from UK mid/small-cap funds and into UK large-caps and global equities. Natixis believes currency volatility is here to stay and likely to remain high and so needs to be considered as a separate investment decision - both on an absolute return level and versus any benchmark being used to measure portfolio returns.
Verdict: Back to the lab
Speed
Origo Options Transfers, which launched in 2008 to help speed up pension transfers, has seen more than two million pensions transferred through its service, worth £100bn. When the not-for-profit online service launched, the average paper-based transfer took around 50 days to complete but that has now dropped to eight days on average. Options Transfers was developed in collaboration with the industry to tackle chronic delays with paper-based manual procedures. According to Origo, 50% of transfers through its service are completed within five calendar days.
Verdict: Promising lead
An inconvenient truth
A review of final salary pension schemes by the Pension Protection Fund (PPF) has suggested conditions are set to be tough in 2017. The PPF said the collective deficit of the UK's 5,794 final salary schemes was £222bn at the end of March, little changed from a year earlier. Although the collective deficit has changed little from last year, fluctuations since the Brexit vote were expected to create problems. Such schemes have been under scrutiny in recent times because of high-profile cases such as the collapse of BHS and the future of steelworkers' retirement deals.
Verdict: Back to the lab
Matt Morris is investment director at Carr Consulting
