‘Ten years of transparent management with the right vision’
Aon Pension Fund has been a client at TKP Investments for exactly ten years. Leo Langenberg, chair of the investment committee, tells how the bond between the pension fund and the asset manager has become closer over those years.
At the beginning of 2007, the pension world was in a very different era than now. ‘It was fairly straightforward in those years. We had experienced a slump in the financial markets shortly before that, but the crisis that occurred after 2007 really shook the world,’ Langenberg remembers.
We know exactly what to expect from each other
At the end of 2006, Aon Pension Fund chose TKP Investments as fiduciary manager after an extensive selection procedure. ‘As an investment committee, we felt that the people from TKP Investments had carefully listened to our wishes and worked with us actively. That was really a breath of fresh air. At that time some asset managers had a rather arrogant attitude; you should be happy that you could become a client of theirs, and first and foremost you shouldn’t interfere with the management too much.’
At TKP Investments in Groningen, the reception was totally different, and it has stayed that way, says Langenberg. ‘Things are done transparently, with a “no-nonsense” Groningen approach. We each know exactly what we expect from the other and demand of the other, thanks in part to clear service level agreements.’
Look-through for insight into investment portfolio
Fiduciary asset management was still a relatively new phenomenon ten years ago. Due to a history of mergers and acquisitions at Aon – a global advisor in the area of risk management and employee benefits and a broker of (re)insurance – the pension fund had two asset managers working for it. The fund wanted to keep both these asset managers in the first step toward fiduciary management.
‘With part of our portfolio, we switched to TKP Investments, which amounted to a sort of semi-fiduciary management in a structure with three parties. TKP Investments then developed a dashboard together with us on which the most important parameters of the Aon Pension Fund are visible at a glance.
When we switched to ‘real’ fiduciary management in 2013, TKP Investments built a ‘look-through’ of the entire portfolio at our request. We can see there which assets and which regions we are investing in with our portfolio. For example, you see the exposure to oil-related funds or specific countries with one search query.’
Management of all assets
Working with three asset managers, three reporting lines and all the associated contacts turned out not to be really workable. So in 2013, Aon Pension Fund decided to have all its assets – approximately 750 million euro for 3500 participants – managed by TKP Investments, which now also provides management support. ‘That makes it very comprehensible, and we were and are simply very satisfied with the service provided. Naturally, we come up with points for improvement from time to time, but the response to them is outstanding. You have good sparring partners with the people from TKP Investments.
High return through the right vision in interest rate hedging
Continuity is also important. We have been working for years with familiar faces who deliver very good quality. If something is wrong in the portfolio, they immediately take action.’ The pension fund has benefitted greatly from, among other things, the view on interest of the investment experts of TKP Investments. ‘After they conducted a study, we hedged the interest rate at a very good time, just before the interest rate fell very sharply. So that turned out to have been the right vision. And last year, we achieved a return of 12 percent on our assets. Not many other pension funds can say that.’