Unfortunately many of the asset managers that have been most successful at winning equity mandates from pension funds in recent years happen to fall into the non-activist category. This means that pension funds who hope to deliver on their UN PRI active ownership commitments by delegating to their existing equity managers are likely to be disappointed.
It also begs a question about the extent to which these non-activist asset managers are currently meeting the requirements specified by their mandates from pension funds. Several pension funds have told me that they are not very happy with the level of active ownership displayed by their asset managers. However, they have indicated that this is not a sackable offence. While an asset manager is delivering satisfactory investment performance, it is hard for fiduciary investors to sack them for non-performance on this topic. Conversely, it is difficult for a fiduciary investor to appoint an equity manager simply because of excellent active ownership capability, unless this is accompanied by top decile investment capability. This combination has not frequently arisen in recent years.
This creates a problem: the most commercially successful pension fund equity managers tend not to implement active ownership effectively while the most effective active ownership managers tend not to win equity mandates.