Fiduciary manager investment performance study 2020

In this first of its kind review of fiduciary manager investment performance for UK pension funds, we assess how managers have performed across mandates with comparable risk-return objectives up to 31 December 2020.

We can now build a reliable picture of how fiduciary managers have impacted pension funding positions thanks to the newly-launched requirements and standardised methodology for fiduciary managers (the Global Investment Performance Standards (GIPS) for Fiduciary Management Providers to UK Pension Schemes).

Our research is based on fiduciary managers who collectively account for over 90% of all UK pension fund assets under fiduciary management.

From our research it is clear a pension fund’s choice of fiduciary manager continues to have a significant financial impact, emphasising the importance of this decision for trustee boards. The variation in performance highlights just how important it is for a pension fund to understand what is driving their investment returns and the impact of their managers’ decisions.

Key trends

  1. A continued trend of pension fund de-risking, with increasing proportions of FM mandates having lower investment return objectives and higher liability hedging requirements.
  2. A weaker relationship between risk and return over the 12 months. In other words, in contrast to recent years, it is less clear that fiduciary managers were rewarded for taking risk in 2020.
  3.  Over 2020, investment performance has been mixed and somewhat dependent on the level of return being targeted. For low and medium return targeting mandates, most fiduciary managers achieved their investment return objectives; for high return targets, fewer managers were successful. 
  4. Wide variation in investment returns and ability to protect against short-term market falls. This applies mainly to medium and high return targeting mandates and can be explained by a wide variation in investment approaches and liability hedging strategies, even among pension funds with seemingly high levels of hedging. 
  5. Clear evidence of fiduciary managers adding value for pension funds targeting a moderate level of returns over the long term. For mandates targeting higher returns, success continues to be mixed; for mandates targeting lower returns, closer consideration of value for money is needed.
  6. Differences in returns within fiduciary managers’ own portfolios indicates differing levels of customisation in portfolios to reflect specific pension fund needs. 



Establishing a standardised methodology for measuring FM performance was one of the many positive outcomes of the CMA Review. It allows pension funds to compare and contrast performance which is more relevant to its own circumstances. We believe the data is useful to make high-level performance observations as we have done in this paper.  

However, it is important GIPS® for FMPs data is used alongside expertise in interpreting the results and awareness of its limitations. It should be no substitute for more detailed, scheme specific performance analysis.

Barnett Waddingham sits on the GIPS® for FMPs Technical Committee and is a leading provider of fiduciary management oversight and evaluation services to UK pension funds.

Please contact Peter Daniels if you would like to discuss any of the above topics in more detail.