pension plans broken

Barclays Global Investors predicts 70%-80% levels of passive management in pension funds

pension plans broken


Barclays Global Investors, with £295 billion assets under management, the world's largest quantitative fund manager, has predicted that levels of 70%-80% passive management would be supportable.

Speaking on the first day of the NAPF Investment Conference in Eastbourne, Lindsay Tomlinson, Chief Executive of Barclays Global Investors London office, said "We believe that as long as the index compilers are vigilant, passive management can go to levels of 70%-80% without introducing serious market inefficiencies."

His assertion is based on defining "passive management" as a method of investment that generates a broadly diversified portfolio, both within asset classes and across asset classes, and which does not incur voluntary turnover. Countering arguments that if the entire market became passively managed, it would become inefficient, Tomlinson explained, "We are a very long way from this stage. All the academic work suggests that the activities of a small number of active managers, working at the margin, will keep an investment market broadly efficient."

Barclays Global Investors estimates that around 20% of UK pension assets are now managed on a passive basis and the proportion is rising steadily. Lindsay Tomlinson said that passive funds "offer broad diversification at low cost and are ideally suited to the needs of long term pension investors."

Issued by: Barclays Global Investors Press Office London 18 March 1998