Most Pensions Are Long Horizon Investors
Our pensions practice also follows our focus on sophisticated investors. Our first pension client came to us in 2004 which was a major international law firms’ partners’ pension plan, whose partners were among the leading advisors to private equity, property and hedge fund businesses. This client is still with us today, and spawned what is now our global pension practice. The insight which we took to pension clients early in our history was that a large portion of their pension liabilities were sufficiently far out into the future such that that portion could be and should be managed more in line with the investment practices of long term endowments and foundations. We were far from alone with this insight as many of the more advanced pension investors in North America had long ago carved out allocations to longer term asset classes such as private equity, property and natural resources. But few traditional pension advisors were equipped with the in-depth knowledge and experience of investing in such alternative asset classes.
An Evolved Endowment Model Adapted For Pensions
The underpinning of our investment approach at our founding was known as the US endowment model as practiced then and now by such respected endowment investors as Yale, Stanford and Princeton. Since then we have evolved our investment approach beyond the basic building blocks of that model to include cutting edge risk management techniques, tactical asset allocation, value-added relationships with our core asset manager partners and creative co-investment strategies across many asset classes. Small to medium sized pensions around the world were late to the adoption of the best institutional investment approach partly due to the fact that most pension consultants are still wedded to the traditional equity and bond approach to investing with a very short time horizon. Our mission over the years with some of the more sophisticated pension trustees has been to challenge and re-evaluate their time horizon in light of that portion of the pensions liabilities that are well out into the future. We often find that well over half of the pension assets are encumbered over relatively long time horizons enabling them to embrace and benefit from investment performance associated with asset classes with longer investment horizons.
We started our corporate life committed to finding the best investments regardless of where they are in the world in each asset class. Our long established presence in Europe, North America and Asia has enhanced this ability complemented by the highly diverse origins of our team with over 25 different nationalities.
Partners Capital Outsourced CIO Investment Platform
Most typically, we are engaged by pension clients as their outsourced investment office (often described as an outsourced chief investment officer or OCIO). However, we are much more than an outsourced CIO, as clients gain access to our 50 person global research team embodying deep expertise in each asset class and such clients are served by their own portfolio management team usually comprising three senior investment professionals, a portfolio analyst and two operations team members.
Partners Capital is not right for every pension sponsor. We tend to work best with those pension trustees who have relevant past investment experience and see the opportunity for enhanced returns through long horizon investing.