Indices and benchmarks ‘made simple’ for pension funds | Pensions and Lifetime Savings Association

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Indices and benchmarks ‘made simple’ for pension funds

06 March 2014

A new guide is being published today (Thursday) by the National Association of Pension Funds (NAPF) to help pension funds get to grips with indices and benchmarks and how best to use them.

Typically indices are used by pension funds as a measurement tool ─ as a benchmark for measuring market performance or as a gauge of how a portfolio manager’s investments have performed against an index. But indices have evolved significantly over recent years and today they can be used in a number of different ways and for a series of varying purposes.

This guide is the latest addition to the NAPF’s made simple series. It looks at how indices work and how they can be used by pension funds when looking at their investment strategies, whilst demystifying jargon such as ‘smart beta’.

Joanne Segars, Chief Executive, NAPF, said:

“Pension funds have a huge responsibility over the assets of their scheme members and using indices and benchmarks can be a valuable way of measuring and comparing performance against a range of external factors to ensure the investment strategy is on track.

“But over a relatively short timeframe indices have evolved significantly to become a series of far more complex and sophisticated reference points designed for a multitude of purposes and outcomes. This can be both useful and deeply complicated for pension funds, which is why we are pleased to add this guide to our made simple series.”

Shamindra Perera, Head of UK Institutional at Russell Investments, commented:

“Indices and benchmarks are an important element of a pension fund’s toolkit. What began as basic measures of broad market performance against which actively-managed investments might be measured, have evolved to also provide a remarkable range of options to investors seeking different exposures and approaches to risk management. 

“As indices continue to develop, Russell feels it is important for investors to understand what it is they are choosing, and exactly how they intend to use it. In working with the NAPF to produce this guide, our aim is to help support trustees and pension managers do just that and gain a better understanding of these essential investment tools.” 

For the first time, a PDF version of this Made Simple Guide will be available to download FREE from the NAPF website. The guide (hard copy) costs £18 for NAPF members and £35 for non-members. It can be ordered online at www.napf.co.uk.


Notes to editors:

Other recent made simple guides include topics such as ETFs, Fiduciary management, Emerging Markets and Scheme Funding.

About Russell Investments

Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell stands with institutional investors, financial advisors and individuals working with their advisors—using the firm’s core capabilities that extend across capital market insights, manager research, portfolio construction, portfolio implementation and indexes to help each achieve their desired investment outcomes.

Russell has more than $256 billion* in assets under management (as of 12/31/2013) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 6/30/2013). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.4 trillion in 2012 through its implementation services business. Russell also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities. Approximately $4.1 trillion in assets are benchmarked to the Russell Indexes, which have provided investors with 30 years of smarter beta.

Headquartered in Seattle, Washington, Russell operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Toronto, Chicago, San Diego, Milwaukee and Edinburgh. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow us @Russell_News.

*includes more than $74 billion of derivative overlay assets under management not included prior to June 30, 2013.

The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.


Contacts:

Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]

Eleanor Bennett, Press Officer, 020 7601 1718 or 07825 171 446, [email protected]

Emma Collins, Communications Manager EMEA, Russell Investments, 020-7024-6709, [email protected]