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Time to shoot the dog
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Date: 9th Mar 2007
LTU has said it has been concerned for some time about Scottish Widows (SWIP’s) continuing management of the Lloyds TSB Pension Funds despite the fact that they are a serial under-performer and has contended that this serial under-performance has gone unchecked because SWIP is part of the Lloyds TSB Group. According to the Union any other investment manager would have been replaced a long time ago but the Trustees have in its opinion put the interests of the wider Lloyds TSB Group above those of the pension scheme members. The Union has said that is unacceptable and it must stop now.
The broker Bestinvest, which names and shames the most poorly performing actively managed funds, has previously described some of SWIP’s investment funds as “dogs with fleas”. Bestinvest’s January 2007 report identifies 60 dogs in the kennel compared to 52 last July and 38 a year ago. SWIP has moved up the dog row since July last year and is now in 3rd position behind Prudential and Henderson.
Hewitt Associates Financial Services Limited were asked to monitor the Civil Service AVC Scheme providers including Scottish Widows. In an internal report which LTU has seen Hewitt’s concluded that the SWIP Global Equity Fund should be closed to new investors and that investors should be told about alternative funds offered by State Street and UBS.
In respect of the Lloyds TSB funds, the latest data confirms that over a three year period the fund return was 14.7% against a scheme benchmark of 15.1% and over 5 years the fund return was 4.8% against the scheme benchmark of 5.5%.
According to the Union whilst the Trustees have begun to act on SWIP’s under-performance and agreed in 2004 to move 14% of the SWIP investment portfolio to a number of specialist managers to see how they perform against agreed benchmarks.
The Union has today said that it believes that the pace of diversification has been too slow and that the Trustees should have moved more of the fund away from SWIP a long time ago.
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