Are fiduciary managers too cautious and missing opportunities?

Barnett Waddingham’s sixth annual Fiduciary Management Investment Performance Review offers trustees and sponsors independent insight into how fiduciary managers (FMs) performed over the year to 31 December 2025 – and what this means for scheme oversight, strategy and value for money.

Drawing on Global Investment Performance Standards (GIPS®) data from over £70bn of assets under management, the review provides an in-depth, comparative view across return targets, investment approaches, liability hedging arrangements and wider market trends.

2025 was another favourable year for investors, with most major asset classes delivering positive returns. For many schemes, headline performance was strong. But supportive markets also create an important test for FMs: did they capture enough of the opportunities available?

Whether you are a trustee, sponsor or pension manager, this report is designed to help you challenge your FM’s performance, understand how outcomes compare with peers, and identify the questions to ask as your scheme progresses along its journey plan.

Key findings at a glance

1. Industry-wide risk aversion driving missed opportunities 

Investment outcomes continue to cluster across FMs, despite different portfolio approaches being taken. This points to a cautious mindset across the fiduciary management market, reflecting the risk-averse nature of the wider pensions industry.

While many schemes may have met their objectives, consistently cautious investment approaches mean providers may have missed opportunities to add value during a three-year period of generally favourable market conditions.

2. Higher-return target portfolios remain challenging

The large majority of FMs achieved or outperformed their scheme-specific investment objectives over the year.

However, FMs have found it harder to deliver for schemes with higher return targets. Private market allocations held back some strategies, while lower allocations to public equity markets also limited the extent to which some mandates benefited from buoyant market conditions.

3. Performance trends are starting to emerge

There is no consistent top performer on a year-by-year basis. But over a longer-term, some FMs are beginning to appear more consistently in either the top or bottom half of the peer group.

In a supportive market environment, evaluating performance relative to peers is an increasingly important metric for evaluating value for money from your FM provider. 

4. Liability hedging needs closer attention

With most schemes targeting lower returns and adopting lower-risk strategies, liability hedging design and implementation now represent a greater proportion of overall investment risk.

The growing use of in-house LDI implementation means some FMs are responsible for multiple aspects of the hedging process, including strategic hedge levels, portfolio design and implementation. This increases the need for independent scrutiny of hedging arrangements.

5. Geopolitical instability remains a key concern

FMs identified geopolitical instability as the key challenge for 2026 and beyond. The macro environment can affect both growth assets and hedging strategies, making resilience, flexibility and clear oversight increasingly important.

Kirsty Steven, Investment Consultant, contributed to this research.