They thus justify their higher commissions

A general trend in all countries, particularly in Britain, the diverse management gradually gave way to the management of specialists. In question, the disappointing first performance and the continuous development of the approach "core satellites", where the heart of an institutional portfolio consists of index funds to expose him to markets, while satellites are managed by experts on asset classes more pointed. The crisis does not appear to have upset this background trend. Indeed, in declining markets, the most experienced and agile experts dig the gap with the rest of the crowd of investors (read here).

Thus, in 1984 and revel, the portfolios of pension funds were fully entrusted to diverse managers. Twenty years later, only 12 of the warrants were (1). The others were 25 per cent entrusted to specialists (a Manager by asset class) or multispécialistes (for managers operating in several asset classes), 63. Research of specialists helped the shops, which have been strong growth, so as to lead to a concentration of this segment in any case overseas (read below).

Lack of coordination

Rather than to a single Manager task to manage all of their diversified portfolio (composed of several asset classes), the institutional opted for another solution, in view of the disappointing performance of the Manager (difficulty to predict correctly and sustainably the ups and downs of the market). They gave several managers of the mandates on each class of assets in a decentralized their risk approach. A failover and change of approach to overall profitable to investors, reveals a study on English pension funds. Thus, the new specialist managers of a class of assets record, off fresh, the superior performance to those of managers who had supported the diverse management. They thus justify their higher commissions. Only, as noted by the researchers, many managers use implies a lack of coordination between them. Each of them manages to the best regardless of what do other experts. What is problematic in an asset-liability management, and requires the intervention of a new type of specialist: a Manager "overlay" which has a vision associate action and policy of placement of all specialists, and intervenes where necessary to reduce the overall allocation of the investor in the desired terminals. A presence that was made necessary over time, and especially in a context of greater volatility.

In this new decentralized organization, "pension funds were allocated less risk to different specialists that they allocated previously to their unique Manager diversified." The use of several managers reduced risks to pension funds. Which compensates for the effects of the lack of coordination between specialists (non-optimal diversification). However, the results are less convincing on removed profits of a competition between selected managers: this is not because there is more competition between them on a class of assets given that their performance individually, increase. Darwinism appears to be less common than it seems.

Pension funds tend to increase the number of managers on a class of assets when their single manager has failed: an underperformance of the order of 2 below its reference for a year generally condemned the removal. Only, if he had waited for six months, around one third of this underperformance have regained. Indeed, the new manager alternate recorded good performance one or two quarters after his arrival and then enters the rank. An illustration of the dangers of a too strong short-termism and rate of rotation in the mandates, including during chahutées periods such as those that have experienced the markets since the summer 2007.