CLERUS provides independent and informed performance assessment and oversight. Over the past decade the main industry response to underperformance has been to lower the bar against which investment performance is being assessed. As experienced investors we bring professional and value-added investment governance expertise directly to pension schemes and other asset owners. We help review and improve the performance standards of service providers who are not currently being independently or appropriately assessed.

Fiduciary managers are in effect investment managers who impose additional cost and churn on pension scheme assets but their value-add is typically not independently or appropriately assessed by trustees. Independent and informed performance benchmarking provides reassurance to trustees and plan sponsors, and ensures that investment performance and value-for-money is being optimised.

Investment decisions based on investment advisors’ recommendations are the single biggest factor in determining investment outcomes for a pension fund, yet their value add is typically not independently or appropriately quantified by trustees despite Myners. Independent and informed performance benchmarking provides clear targets against which investment advice can be evaluated. This transparency helps off-set the conflicts of interest inherent in the investment consulting model and can lead to significant performance improvements to the benefit of both plan sponsor and beneficiaries.

Absolute return products are typically promoted as portfolio diversifiers providing equity-like returns, but benchmarked and remunerated against cash-like benchmarks. This is a huge governance issue as excess fee schedules and potential under performance are funded by plan sponsors (thereby putting beneficiaries at increased risk) however no-one is held accountable for these costs. Independent and unbiased assessment is required to off-set this conflict of interest and lift the bar on how investment performance is assessed, and rewarded, to the benefit of all stakeholders in the pension fund.

Trustees looking to improve investment governance can do so by creating a simple benchmark and decision-making framework aligned with the long-term investment objectives of the pension fund. Trustees are then able to focus on value-added activities to the benefit of all stakeholders.