News & Events

By Paul Kemmer

The discipline of adjusting a portfolio’s allocation between different asset classes in light of changing market conditions could have boosted investors’ returns significantly over the last 13 years, according to our calculations.

The chart below is a table we put together showing how the six major asset classes – equity, government bonds, credit, cash, property and hedge funds – each performed since the start of 2000.

We doubt anyone at the start of the millennium correctly predicted what actually went on to happen. For example, equity and hedge funds, which are often thought of as likely to generate the highest returns, signally failed to excel. Over the 13 years to the end of 2012, equity was the best-performing asset class only once. The same was true of hedge funds.

That strike rate is no better than government bonds, which topped the table in 2008. Property, on the other hand, came top six times, and credit twice.

It would be completely unrealistic to expect anyone to guess the top-performing asset class correctly every year. But investors might, we think, realistically aspire to allocate two-thirds of their portfolio, at the start of a year or other given period, to the asset classes that end up among that year’s top three performers.

If they had done so over the last 13 years, then according to our calculations they would have made an average of 8.2% a year, compared with the 5.7% a year they would have made by allocating equally between equity, government bonds, credit, property and hedge funds. That is an additional 2.5 percentage points a year.

Decisions on where to allocate a portfolio between different asset classes as market conditions and relative valuations change are, therefore, critical. Indeed, we regard them as the most important investment decisions an investor can take.

Source: P-Solve & Datastream

Pensions journalist Laura MacPhee interviewed P-Solve managing director Paul Kemmer at 2013’s Workplace Pension Live event, this year taking place at Edgbaston Cricket Club, Birmingham on 8th and 9th May. Paul attended the event to provide some insight into fiduciary management.

He said that, while fiduciary management should not be seen as a panacea for all pension schemes, some trustees might find it effective, particularly in what has become a complicated investment and regulatory environment.

Paul went on to stress that fiduciary managers all have varying propositions. It is important to choose a manager that really understands the scheme’s liabilities, he said.

P-Solve’s chief executive Mike Faulkner took part in a roundtable debate last month, at the 2013 spring conference of the Pensions Management Institute, addressing the question “Investment – who will best deliver the pensions promise?”

P-Solve has hired seasoned institutional investment editor and writer William Hutchings as part of its drive to explain pensions and investment in direct, unambiguous language.

P-Solve has increased its number of charity clients after being appointed by NACRO, the UK’s largest charity dedicated to reducing crime.

The organisation’s 1,400 workers and volunteers help many thousands of people every year in partnerships in over 200 communities. It has 1750 members in its £40.5m pension scheme.

Fiduciary manager P-Solve has won the mandate to manage the £800m of assets and the liability risk overlay of the AgustaWestland UK pension scheme.

AgustaWestland Head of Pensions Mike Nixon said: “We have worked closely with P-Solve for more than seven years and continue to be impressed by the quality of their people and innovation. Their expertise in dynamically managing asset allocation and liability risks is especially valuable in these volatile and uncertain markets.  The trustees draw significant comfort and confidence from knowing that there is ongoing attention to the adaptation of the portfolio to changing market conditions and opportunities.”

P-Solve Associate Director Barbara Saunders has been named one of the Top 40 rising stars in asset management under the age of 40 by editorial staff at Financial News.  From a list of 150, Barbara was chosen based on her achievements to date given her age, the stature of her mentors, asset values and potential to reach a position of great influence. 

 P-Solve CEO Mike Faulkner said:

“P-Solve is all about bringing together the best people, those who want to use their talents on behalf of our clients. We believe that performance matters  and are delighted that Barbara and her abilities have been recognised by the Financial News editorial team which covers our industry in depth.”

Please follow the link below to see the full story on the Financial News website. 

P-Solve’s Chief Investment Officer Glyn Jones explains inflation to UK’s highest-rated breakfast news programme.

Glyn spent the morning with BBC Business Breakfast presenter Steph McGovern to outline what was expected to be the inflation rate to be announced later that day, in particular the impact on food prices because of the global weather. He emphasised that while food was important, it only counted for 12 per cent of the inflation indices we see.

Over the course of three live interviews in Manchester, he reiterated that personal inflation was linked to how you spent your money. The audience – an estimated seven million  - heard for example that if a significant part your expenditure was filling up your car, this meant your personal inflation maybe lower as petrol prices were coming down.

Investment consultant and fiduciary manager P-Solve has acquired retirement planning consultancy Cassidy, to support its growth agenda in the US.

As part of a continuing drive to increase its presence in the corporate retirement benefits planning market, P-Solve is extending its award-winning approach to a wider range of corporate clients across the Atlantic.