Fiduciary management was conceived as a sophisticated and holistic solution to the shortcomings of pension asset management that became evident after the equity market downturn of 2000-03. Among these were a lack of centralised portfolio oversight, lack of integrated risk management, and an over-reliance on outsourced managers without systematic monitoring.
Yet the 2008-09 crisis revealed the shortcomings of those first fiduciary mandates themselves – for instance that some fiduciary managers were not as responsive to asset class opportunities as their clients expected. The Dutch regulator also found shortcomings in the risk management processes of some large pension funds. First generation fiduciary contracts, which tended to emphasise manager selection over risk management, were…
