The European fiduciary management market has surpassed €1trn in assets and is set to grow by over 100 per cent by 2015, according to research by Spence Johnson.

The company's market intelligence report Fiduciary Management starts to mature showed that the European fiduciary management market has grown 38 per cent since 2010. The UK has led the way with 128 per cent growth to €43bn, comparable to the Dutch figure of €42bn although this only represents 6 per cent growth.

As developed fiduciary management markets in Europe continue on a strong growth trajectory, pension funds in particular are embracing a more holistic and delegated solution. “Pension clients appear to be recognising the value of implementing a holistic solution and benefiting from the close partnership,” the report said. “Providers typically implement a service set consisting of the full range of strategic, governance and asset management services for pension clients.”

But the growing fiduciary management market poses good and bad news for asset managers. “Fiduciary managers are much more sophisticated which makes relationships easier, they do not rule out more innovative and sophisticated products, they are easy to access and most important their investment volumes tend to be large,” the report said. However, it added that “an uncomfortable level of transparency can be required with competitors, fees come under pressure (again), a new understanding of FM is required to meet slightly nuanced demand, and assets tend to be less ‘sticky’ – behaving more like fund of fund money.”

The report added fiduciary managers tend to want to do asset management internally. “Although the majority of assets are currently managed by external managers, the trend is not in the asset managers’ favour,” it mentioned.

The majority of the European fiduciary management market is made up of large Dutch open DB schemes while the UK is the only market with a significant proportion of closed DB assets.

The report argued the definition of a broad range of services is clearer, although the combination is different per client. The services include governance (investment oversight, monitoring, reporting and performance measurement), strategic services (ALM, advice, risk budgeting and education) and asset management (LDI, dynamic risk management, portfolio construction, manager selection, tactical asset allocation and implementation).

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