Under fiduciary management, scheme trustees make high level strategic investment decisions, and the fiduciary Manager is responsible for the lower level investment choices needed to make that strategy happen.
The areas which are the responsibility of the trustees and the areas which are the responsibility of the fiduciary manager will vary between mandates.
Fiduciary management is therefore a way of running a pension scheme, not an investment strategy in itself.
For example, scheme trustees might set the overall required level of investment return (and maximum acceptable level of risk), and work with the fiduciary manager to establish the scheme asset allocation. The fiduciary manager might then have some freedom to vary the scheme’s asset allocation and complete freedom to choose the underlying investment managers.
The fiduciary manager will almost always appoint investment managers rather than trade equities and bonds themselves.
The aim of FM is to better utilise trustees’ limited time and allow decisions to be taken and implemented more quickly with clear accountability.