By managing risk, rather than hiding from it, Cardano, the investment consultant, has won business worth £50 billion since it was established in the UK eight years ago.
To keep up this momentum it attracted three senior executives from Goldman Sachs in 2015, hired its first sales force and is venturing beyond its core business of advisory and fiduciary into sectors such as defined contribution pensions. Cardano believes it now has enough capacity to treble the size of its fiduciary business.
Kerrin Rosenberg, who has been Cardano's UK chief executive since he joined from actuarial consultancy Bacon & Woodrow in 2007, doesn’t rule out expanding into other countries if Cardano can hire the right teams. But he stresses that Cardano will remain loyal to its clients, both those it advises on pension choices as well as those whose assets it manages on a fiduciary basis. He said: "We want to retain a business where we are on the same page as all our clients."
Its advisory clients include some of the UK's largest pension schemes such as GlaxoSmithKline the pharmaceutical giant, and energy group E.ON.
On the fiduciary side, Cardano manages schemes with the help of interest rate swaps, whose value goes up when liabilities rise following interest rate falls. It adjusts swap positions according to client requirements and market conditions. It also backs strategies to boost the value of client assets. In each exercise, derivatives play a central role, as they have done since 2000, when Theo Kocken set up the firm in the Netherlands with the aim of generating stable outcomes in uncertain times.
Volatility after the 2008 credit crisis in the US and Europe meant Cardano managed to navigate an unnerving mix of risks and rewards, and it reckons a similar pattern has been spreading out from China. Cardano recently cut its interest rate forecast for that country, fearing its impact on the global economy. The Japanese central bank cut rates to 0.1% soon after. But Cardano is also reaping benefits from price swings away from the norm. Rosenberg said: "A Chinese long/short manager was our best performer last year.”
One UK client said: "Cardano is more of a financial engineer than it looks at first sight." They added that its approach was working well, with recent market volatility creating new opportunities.
Cardano in the UK has generated an annualised return of 11.5% since inception in 2007 against 8% from its benchmark based on liabilities of all its clients, and expressed in UK government bond (gilt) yields. Over the same period, it has increased the funding position of its clients by 24.2 percentage points, after stripping out deficit contributions.
It has been voted top fiduciary manager in each of the last seven years in the Financial News Asset Management Awards for Excellence.
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