The underlying managers within the Norwich manager of manager income, Norwich manager of manager cautious, Norwich manager of manager balanced and Norwich manager of manager growth funds will be selected by Aon Asset Management, which provides multi-management services to the pensions industry.
NU decided to outsource manager selection to Aon because it did not have the necessary skills and resources in-house. However, NUs investment arm, Morley, will provide the asset allocation framework for the funds.
Aon can choose from a range of retail and institutional managers both in the UK and overseas. The selection criteria is not set in stone because Aon recognises that every manager works in a different way. Factors that may be considered are how managers generate ideas, the level of risk they are taking and how the investment teams are motivated.
Aon favours managers who are paid performance fees, those who have just one or two products and those invest in their own funds because their interests are directly aligned with those of the investor.
Once a manager is on board, Aon will not interfere with how the portfolio is run as it believes doing so would destroy the value of the manager. If managers deviate from the original objective or do not perform, they will be replaced if necessary.
Norwich Union has provided a good range of funds to cater for investors with different risk profiles. However, manager selection must be pragmatic as it may not be possible to get the best manager for every asset class. Some managers may be closed to new business and others may be too expensive to employ within Norwich Unions cost budget.