We set out how asset managers can life-wrap their funds on the Mobius platform, to make their strategies available to pension schemes of all sizes.
Many members, and the UK government, want to see pension assets used to support the drive to net zero and other ESG initiatives. We’re also seeing increased demand for pension assets to be invested in long-term, illiquid infrastructure projects, venture capital, private assets, structured capital and other complex structures.
The pace of managers developing exciting new strategies to meet these demands is ever increasing. So, for large pension schemes, which can deploy significant capital to invest in bespoke funds, this presents huge opportunities.
But for most of the UK’s mid-size and smaller schemes, high minimum investment limits, or lack of liquidity, can put these strategies out of reach – or does it?
UK life company structures offer an effective means to pool funds making them ideal for pension schemes due to their flexibility, tax efficient status and compliance with the permitted-links regime. But for many asset managers the cost, capital reserving and regulatory burden of creating their own life company structure are prohibitive.
That’s where Mobius comes in. We effectively provide access to our life company to asset managers to life wrap segregated portfolios which are then available to investors on the Mobius platform. These funds can include bespoke portfolios, created for a single pension scheme, or pooled funds available to all schemes.
Mobius already works with multiple asset managers to make our funds available to UK pension schemes in a cost-effective and flexible manner. The access to the Mobius company for asset managers means trustees and consultants can consider a far wider range of strategies – many of which can be bespoked to their exact requirements.
Using Mobius to life-wrap investment strategies offers asset managers significant cost advantages, as well as taking away the regulatory burden and need for regulatory capital.
Life-wrapping funds on the Mobius platform offers more choice to investment consultants, pension schemes and their members, while offering fund managers an effective way to distribute their products to more schemes.
If you would like to find out more or discuss how we can life wrap a fund for you, please contact us today.
Thank you for reading this article, to find out more about Mobius, please visit our home page.
The government has long been encouraging pension schemes trustees to consider the environmental, social and governance (ESG) factors and stewardship approaches in their investment decision making.
Occupational schemes with more than 100 members already need to prepare a Statement of Investment Principles (SIP) which set out their investment policies and report annually on the extent to which they have followed their policy.
Trustees are being encouraged to vote their shares at company meetings to support the policies set out in their SIP and influence how companies respond to ESG and climate change issues.
Proxy voting is easy enough for large schemes which invest through segregated portfolios and can vote their shares directly. It’s somewhat harder though for schemes which hold their assets in pooled funds to influence voting – which is generally undertaken by the asset manager on their behalf. The fund managers’ stewardship approach may or may not reflect the ultimate owner’s SIP.
Late last year a government Taskforce on Pension Scheme Voting Implementation reported on the issue. It wants to see pension schemes trustees empowered to vote their shares, even when they are held in a pooled fund structure.
At least one major asset manager is already enabling institutional investors in pooled funds to cast votes in proportion to their share of the fund.
At Mobius we want to support all our clients invested in pooled funds on our platform to be able to vote their shares. We have already taken steps to enable asset owners to set out their voting intentions and to vote on their behalf on some of the pooled funds held on our platform. Looking forward we are also working to extend this range further.
Proxy voting of pooled fund assets enables trustees to live up to the promises set out in their SIP and empowers and engages scheme members in the decisions their schemes’ take.
At Mobius, we’re ready to make proxy voting of pooled assets a reality for trustees. If you’d like to find out more about our approach, please give us a call today.
But the real shame is the advantages of real assets have often been harder for smaller schemes to access. Higher costs, illiquidity, lack of daily valuations and high minimum investment limits are seen as a barrier by many.
Now, with resurgent inflation, many smaller DB and DC schemes are likely to want to reconsider their position and benefit from the potential inflation hedges offered by some real estate and infrastructure investments.
The good news is the Mobius platform has the flexibility and capabilities to handle private assets and other illiquid investments for DB and DC schemes of all sizes.
We’ve invested in flexible technology which means we can host funds on the platform which are not daily priced – and we can report effectively on these assets to trustees and their advisers.
We’re also able to help ‘lower governance’ schemes to invest in private asset funds with high minimum investment limits. Our ability to aggregate holdings gives smaller schemes access to these alternatives on a cost-effective basis.
At Mobius we have the technology, flexibility and access to illiquid funds to help our clients reap the benefits today. If you would like to find out more, please contact us.
Let’s consider what happens when a consultant has two clients – one on the Mobius platform and the other directly invested with managers.
In this example, both schemes use a selection of fund managers and want to withdraw money to pay the transfers. The cash amounts required to pay these transfers are sufficiently significant for it to make sense for the withdrawals to be made to bring the portfolio in line with the benchmark asset allocation.
With the directly–managed scheme there is a lot to do. The consultant needs to contact all the managers for prices to calculate the manager allocations and then calculate the quantum of each withdrawal. They then need to complete the withdrawal paperwork, instruct all the managers, collate all the receipts and calculate the new asset allocations following the withdrawals.
This ‘low value’ task will probably take the consultant several hours to complete and leaves them exposed to execution risk. They will also rack up significant time cost – and all for an exercise seen of as having only modest added-value to the client.
In comparison, the other scheme is managed on the Mobius platform. Here the consultant simply sends Mobius one authorised instruction, which we implement and report back to them via a transaction statement and valuation. Simple, safe, cost effective and efficient.
The same is true for schemes looking to change strategy or transition from one fund manager to another. Work which can take several days off-platform is easily completed in ‘real time’ by using Mobius.
So, as part of all our jobs is to manage risk effectively – prudent schemes and consultants are reducing risk by using Mobius to deliver professional platform-based investment administration.
It would be fantastic if all these services could be delivered in one place by one supplier – but for real, practical reasons, schemes need to rely on a range of different suppliers to meet their needs.
It would also help if the different suppliers were all used to working collectively, to provide a best-in-breed solution, where straight through processing and integrated systems worked seamlessly together.
The perfect pension administration eco-system is gradually emerging, like the butterfly from its chrysalis, and at Mobius Life we’re helping to nurture this process. Our wide range of client relationships and expertise in collaborative working across the spectrum of service suppliers to pension schemes, means we’re perfectly placed to enable the eco-system to thrive.
We already work closely with all the key providers involved in delivering workplace pension solutions. These include consultants, investment managers, member administration specialists, data and reporting analysts and governance experts. As well as bankers, technology and website suppliers, scheme accountants and member communication professionals.
And because we’re working collaboratively with these suppliers all the time, we know how they operate and we have developed our capabilities to integrate with theirs, making life easier for our clients.
So, the perfect pension administration eco-system may not be fully formed yet – but at Mobius we’re working to help the industry evolve, to deliver better and more efficient holistic solutions to sponsors and in turn improve member outcomes.
And of course, all of this helps to meet the regulators’ requirement that schemes deliver measurable value for money.
If you would like to discuss how the pension administration eco-system might develop and grow, please let us know. We’d be delighted to hear from you.
Mobius Life held its second annual investment managers seminar on Thursday 28 April at The Brewery conference centre in London. Around 80 guests attended representing over 50 investment management houses. It was fantastic to have an in-person event after the lockdowns and to catch up with so many friends from the industry.
We believe this tremendous turnout demonstrates confidence in our approach to delivering platform services from across the investment management community.
We were pleased to be able to report Mobius continues to grow. We now have nearly 750 clients and over £23 billion in assets on the platform. We are also innovating for our clients and investment managers. Our focus for 2022 and beyond is on delivering ESG, TCFD and transaction cost reporting, supporting schemes with illiquids and income distributing funds and providing the building blocks to enable DB and DC consolidation.
We presented on our support for consolidators, explaining how our flexible platform, extensive fund range and ability to innovate and manufacture fund solutions enables DB and DC consolidators and master trusts to deliver for their members.
We were delighted to welcome three guest speakers.
Graham Martin of Schroders Solutions spoke of his experience of working with Mobius to deliver complex and illiquid solutions to pension schemes of all sizes.
Priya Jassal of ISIO explained how the Mobius platform enabled them to deliver a better service to their smaller clients, including offering low management and platform fees, breadth of investment opportunity, expert onboarding and transition management, together with specialist reporting and monitoring services.
Sarah Smart of FidesIQ gave a fascinating presentation on the changing world of data and how pension schemes and investment managers will be able to deliver better solutions and outcomes by accessing and interpreting the huge amount of data available to them.
We would like to thank all our speakers for their time and work in delivering such interesting presentations and all our guests for attending the event.
These findings come as no surprise to Mobius. We’re seeing more and more schemes with a sole professional trustee and we’ve been developing our services to meet their needs.
Some professional trustees assume the responsibility as a Chair/member of an existing trustee board working closely with lay trustees and the sponsoring employer. Others will be the sole trustee of the scheme working with the sponsor in making all the decisions on behalf of the scheme.
Often sole professional trustees work with multiple schemes. These are frequently small to mid-size schemes with assets of up to £200 million. This means professional trustees can control significant pools of assets in aggregate. We’re familiar with sole trustees acting for multiple schemes and being responsible for assets of over £1bn.
Sole trustees are taking on all the responsibility for implementation across all of their schemes and that can be daunting. This risk can be managed effectively by working with Mobius. Our investment administration capabilities mean that when they give an instruction it will be implemented efficiently, without them having to deal with multiple fund managers – or take on the implementation risk. Rebalancing, trigger point monitoring and transition management are all undertaken at the platform level allowing the trustee to concentrate on governance, strategy and delivering member benefits.
When sole trustees are working with multiple schemes, we take care of actions across all the schemes; for example, when LDI triggers are hit and adjusting leveraging levels are required. By pooling assets we can also give professional trustees access to more competitive fund management fees – or to funds which would otherwise have prohibitive minimum investment limits.
Trustees of all descriptions benefit from our independence. We deliver superior investment administration services, without the conflicts of being owned by an adviser or asset manager, or the lack of focus of being part of a major financial conglomerate.
It is likely more and more small to medium-sized pension schemes will appoint sole professional trustees in the future. And we are there to support them, by providing efficient investment and implementation. If you would like to find out more about our services for corporate trustees, please get in touch.
The shift from traditional bank lenders as a result of tightening regulation since the global financial crisis, has resulted in the financing gap being filled by capital flows from private credit funds. It is a significant and growing market, driven largely by the search for higher yield. S&P Global reports the AUM of funds principally involved in direct lending grew to $412 billion by the end of 20201.
Typically, alternative credit involves non-bank institutions making loans to private companies. These businesses borrowing in the alternative market are usually mid-market private companies who struggle to access traditional bank finance. However, the expansion of private credit has resulted in a wide range of sub-asset classes covering direct lending, leveraged loans, distressed debt, securitised credit, consumer finance, real estate and infrastructure debt.
Private credit funds must undertake rigorous due diligence before investing, and as lending is privately negotiated, managers will generally seek seniority and stronger covenants. These allow investors to access higher yielding opportunities while mitigating some of the associated risks. The problem for many DB schemes however, particularly small to mid-size ones, is how to access and implement alternative credit funds. Investing requires significant levels of governance, the funds can also be illiquid with unique fund structures, and high minimum investment limits restrict access to only the largest schemes.
Now, Mobius has made a range of alternative credit funds available to DB schemes of all sizes on our platform. All the governance is undertaken at the platform level, meaning schemes do not have to jump through numerous governance hoops and cumbersome account opening documentation. Mobius takes on the implementation of these illiquid assets to manage the infrequent dealing cycles and valuations.
All implementation is carried out by Mobius, as we accommodate the complex dealing terms associated with the asset class.
Many DB schemes and their advisers can see the investment potential offered by alternative credit. Now the opportunity is available to far more schemes, thanks to the scale and flexibility of the Mobius platform and the continued investment in our infrastructure. If you want to know more, please get in touch.
At Mobius we’ve been fortunate to be pretty much unaffected by the pandemic. All our pension scheme clients have continued to invest and markets, barring some increased volatility, operated ‘relatively’ normally.
This means we’ve been able to continue to innovate to meet the needs of our clients and develop additional services to help meet their increased reporting and governance requirements.
As a business we are totally driven by our clients’ needs – and here are just a few of the innovations and developments we delivered to help them achieve their goals in 2021.
➢ Manufacturing a Structured Equity solution: In early 2021, we rolled out River and Mercantile’s Structured Equity solution on the platform – a first for the industry. Pension schemes of all sizes can now structure a growth asset tailored to meet their specific requirements through the Structured Equity approach, without being restricted by legal and governance costs, resources and minimum fees.
➢ Offering access to illiquid credit funds: This year an increasing number of clients told us they wanted to access illiquid alternative credit funds. For many investors these funds are difficult to access directly, due to higher governance requirements, given the complexity of the fund structures and dealing terms. We innovated by harnessing our infrastructure to tackle the challenges associated with illiquid assets. This included making alternative credit strategies offered by Apollo and Alcentra available to DB schemes.
➢ Meeting ESG, climate reporting and transaction cost disclosure: New regulatory requirements for schemes to make annual disclosures on ESG investments, climate metrics and transaction costs has added new governance burdens to already stretched trustees. We innovated to provide trustees with scheme-specific reports, which saves them the need to collate reports at an individual manager level. Using the power of the platform and our strong relationships with managers, we can provide these reports quickly and cost-effectively for trustees, enabling them to receive all the information they require from a single source.
➢ Supporting DC consolidation: We are using the power of the Mobius platform to support DC consolidation where schemes wish to combine assets create operational and efficiency savings. This initiative supports the government’s drive to encourage DC consolidation. We have worked closely with industry leading providers to support net zero funds initiatives and access to private markets. Our ability to cost effectively transition and blend funds has enabled trustees to develop blended climate-related default funds, with further innovation planned to support net-zero initiatives.
➢ Supporting DB consolidation: We have been appointed by Stoneport, the UK consolidator for smaller defined benefit schemes, as its investment platform provider.
➢ Investing in our team: We have continued to invest in the Mobius team, increasing our headcount by around a third since March 2020, with additional expertise in our operations, client servicing and distribution teams.
➢ Engaging with the pensions industry: We held our first online event for the investment management community in April 2021. Over 100 delegates from 63 investment managers joined to learn more about Mobius’ platform capabilities and to hear the perspectives of an investment consultant and fund manager.
And finally winning top industry awards!
And to cap it all we won not one, but two prestigious industry awards – the Professional Pensions Institutional Investment Platform of the Year (for the third year running!) and The Pension Age Innovation (Investment) Award.
So, 2021 was another busy year for Mobius.
We have worked hard to meet our clients’ needs throughout the year and look forward to continuing to serve them in 2022.
Wishing all of you all the best for the festive season and the new year.
Stoneport runs a scheme that allows participating employers to retain a share of control in their investment strategy, whilst also being part of a consolidator vehicle that will enable them to target buyout in the longer term. Stoneport aims to have assets of around £2.5-£3.5bn once it has fulfilled its quota. Stuart Southall, an Independent Trustee of Stoneport, said: “We are delighted to be working with Mobius – the UK’s only truly independent institutional pension platform which is solely focused on delivering exceptional investment administration which accurately and cost-effectively implements schemes’ strategies.”
The appointment of Mobius is a major milestone for Stoneport and highlights how it can provide a first-class service to small schemes at affordable prices. The platform will host most of Stoneport’s investment funds – which small schemes will be able to access via Stoneport, without having to do their own market review. The appointment of Mobius will enable most small schemes to transition their existing funds to Stoneport easily. Stoneport appointed Mobius on the recommendations of the trustees’ adviser, Barnet Waddingham. Ian Mills, Partner and Senior Investment Consultant at Barnet Waddingham said: “We were delighted to advise the Stoneport trustees on their appointment of Mobius.
“The trustees asked us to look at ways that incoming schemes’ assets can be transferred in to Stoneport efficiently and then managed cost-effectively during the scheme’s growth phase. As independent advisers we considered a wide range of different investment structures to get the best possible results for our client, the appointment of Mobius will in-turn help the scheme reach its desired outcomes.”
Mobius said: “Stoneport has developed a truly innovative approach to small pension scheme consolidation, which will help to protect members’ benefits and reduce the cost and governance burden for sponsors.
“We are delighted that Stoneport has chosen Mobius as its investment administration platform. Our independent and innovative approach to delivering platform services offers Stoneport a highly efficient investment administration service. This will enable them to respond quickly to developments in investment strategy, transition and onboard additional schemes efficiently and benefit from rebalancing and de-risking opportunities as they occur.”
Small DB schemes with less than 1,000 members each are responsible for providing the retirement benefits of almost one million members, but these individuals are split across some 4,350 different schemes, nearly all separately administered.
Along with increased legislative pressures and a lack of scale to run efficiently, small schemes end up shouldering running costs of more than £1,000 per member, per year. This compares to less than £100 for the largest schemes.
Created and managed by Punter Southall, with actuarial, administration and investment advisory services provided by Barnett Waddingham, Stoneport is the only consolidator to offer a solution targeted at small schemes, who stand to benefit most from consolidation.
-ENDS-
For further information, please contact:
Mobius Life, Mike Lord
E: mike.lord@mobiuslife.co.uk
M: +44 (0)7831 401 311
Notes to Editors: Mobius Life (www.mobiuslife.co.uk) Mobius Life is the market-leading institutional investment platform. Over 800 DB and DC pension scheme clients trust us to administer c.£25 billion of their members’ assets. We’re different to everyone else – we are independent, so our entire focus is on providing solutions for pension schemes.
Our clients benefit from the most innovative solutions in the market, driven by our award-winning ideas culture and can-do mindset.
Our track record of delivery is second to none which makes us the trusted partner of choice for UK DB and DC pension schemes. Mobius Life won the Institutional Pension Platform of the Year award at the 2019, 2020 and 2021 Professional Pensions Awards and the Pensions Age Innovation (Investment) Award 2021.
Stoneport is a consolidation vehicle for occupational defined benefit pension schemes in the UK with fewer than 1,000 members. It was conceived and developed by Punter Southall and will be managed by Stoneport Pensions Management Limited, a wholly owned subsidiary of Punter Southall. Barnett Waddingham provide administration services plus the actuarial and investment advisory services required to operate Stoneport. Stoneport will be regulated by the Pensions Regulator, just like the small schemes it provides a solution for.
Punter Southall has been developing new ways to transform people’s financial future, since 1988. We help our clients to discover and seize the right opportunities. By listening to them and understanding their needs, we change and adapt our portfolio of companies and services to help deliver their goals. We work with pension schemes, employers, insurers, charities, and private clients to provide expertise in pensions and investments, wealth management, workplace savings, health and protection, and financial data.
We use essential cookies to make our site work. We'd also like to set optional analytics and advertising cookies to help us improve it. By clicking Accept, or by turning on an option after clicking View Preferences, you agree to this. Your choice will itself set a cookie on your device to remember your preference. You can find further details about our cookie use in our Cookie Policy.
Functional
Always active
These cookies enable core functionality of our website, such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.We use statistical cookies to understand how visitors use our website so we can improve it, these cookies collect anonymous information that helps us see which pages are popular and how users navigate the site.
Marketing
We set advertising cookies to record which pages of our website you’ve seen in order to show you relevant ads and re-marketing campaigns. These cookies track visitors across our website and collect information to provide customised ads.
