“The biggest trend on the benefi ts side
two diff erent philosophies. Th e fi rst says
that pension funds are long term and
should invest in asset classes which will
has been the closing down of defi ned
give the best long term performance.
Th e other school of thought is that
pension fund liabilities are bond-like, so
benefi t schemes and setting up of defi ned
why not invest in assets which match
those bonds. Th ese two schools of
contribution schemes”
thoughts are generating the debate
about liability-driven investing,”
explains Drake.
Andrew Drake, Morgan Stanley
In its 2008 Global Pension Fund
Study, Watson Wyatt examines
investment changes in 11 countries
Research conducted by Watson Wyatt reveals a series of with the largest workplace pension
problems that members of defi ned contribution schemes are systems in the world. Pension funds
grappling with. For one, they spend a limited time considering have moved signifi cantly away from
their decisions. Th ey have a limited understanding of the likely the balanced approach they held a
outcome from their decisions, and save too little. Th ey also decade ago. Th ey now have a global
have ill-informed choices of funds. “Investors have generally average of around 56% in equities,
found that the complexity of the task at hand and the amount 28% in bonds, and 16% in other
of choice available has led to inertia rather than better assets, (estimated to be around 5% in
decisions. DC plans and products have tended to be sponsor- cash and 11% in alternative
and provider-led rather than designed from the perspective of investments). Th ey are increasingly
the member,” says the consultancy. using liability-driven approaches, and
Pension funds have also rapidly changed their approach to they have increased the use of absolute
investment matters. “Th ere is a big push for people to have return mandates. Pension funds have
liability-aware investments. In the UK there is a split between also separated the alpha and beta
components of their portfolios.
LEVELS OF SOPHISTICATION
EBRU SMITH
Many of these investment approaches
were taken by endowments more than
Title: Assistant Fund Manager
a decade ago. Endowment funds,
Current employer:
Reliance Mutual Insurance
Society
Previous employers:
Schroder Investment
Are there certain skills you would consider useful for your job?
Management; British Embassy in
Confi dence and the ability to interact with people clearly are
Turkey; Bloomberg
extremely important.
University: University of East
London
How do you think the role you’re in now will change over time?
Degrees: Bachelors in Economics
I aim to achieve the SII qualifi cation in the next few years. I would
Professional qualifi cations:
hope that this would push me to have more investment freedom,
IMC; IAQ
increase my responsibilities within the fund and grant me some
management status in the running of the actual business.
What attracted you to this career path?
The stock market buzz and working with lots of intelligent Do you have advice for someone intending to pursue the same
people attracted me to my current career. career path?
Lots of stamina: even if you fail some exams, keep trying. Have a
What are the major challenges you face in your position? positive attitude, even in the face of adversity. If you are not
Making bold investment decisions that affect other people’s enthusiastic about your job then get another one that gives you
life savings. a buzz.
80
776-81 ratings agencies.indd 806-81 ratings agencies.indd 80 222/11/08 10:48:022/11/08 10:48:02
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