City Eye: Old mutton chops would turn in his grave

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The Independent Online

The silly season has arrived late, just like summer. Mercifully, for all the talk of the credit crunch, it promises to be just as brief.

While the markets continue to suck up liquidity (the European Central Bank pumped another ¿¿2.25bn into the eurozone on Friday) it's all very quiet out there. So let me bring things to a close on this theme, I hope, by offering the important information that nothing spectacular has happened.

According to the latest survey of the world's 300 biggest pension funds by consultant Watson Wyatt, the sum under management in these Goliaths grew 12 per cent to $10.4 trillion (£5.1 trillion) during 2006. And – great news – very little has happened, says Roger Urwin, global head of investment consulting at Watson Wyatt: "The credit crunch has had zero impact so far on the asset allocation of these funds. It takes a long time to execute these things; the process works on what's called calendar time rather than real time. I'd say that pension funds haven't suffered at all so far."

Over the two decades I've reported on investments, consultants have done a good job of persuading trustees to buy more and more shares as a percentage of our pension funds.

Once upon a time, if shares went belly-up, it mattered little to the dour, mutton-chop-whiskered chappie who bought nothing but commercial property and long-dated government bonds, and believed that bull markets in equities, along with strong drink, were the work of the devil. Such were the folk running our pension funds.

No longer. Mr Urwin tells me that "global pension fund investment in equities looks to have peaked at 60 per cent. There's been steady growth, up from 45 per cent in equities 20 years ago. People's understanding and appreciation of risk and their ability to assume and deal with it has grown strongly."

Apart from certifying their own competence and usefulness and, in effect, writing their own cheques, investment consultants used to research fund managers and set up a list for pension trustees to choose from. The subsequent interviews used to be known as a beauty contest.

These, it seems, are going the way of the swimsuit versions that gave them their name. "There's the due-diligence, box-ticking function, I suppose," says Mr Urwin of the modern consultant's role in pension fund management. "But a much bigger and more exciting function is taking responsibility for the asset allocation and sorting out the line-up of potential managers. We research their products, performance history and profile. We used to be asked to prepare long lists of managers; now we're quite likely to be asked to offer a shortlist of one."

Dining out in the 'Ditch'

Congratulations to Nick Jones, whose expanding Soho House empire has expanded to "The Ditch", otherwise known as London's ugliest and most self-regarding quarter, Shoreditch.

Mr Jones tells me that this branch of the members club is doing a roaring trade: "There's a real mix of members. If we'd opened there three years ago, it wouldn't have worked so well; we would have had to rely on the City. But there are so many creative industries there now."

His backers include Gavyn Davies, the former BBC chairman and chief economist of Goldman Sachs who is now a private-equity investor. Then there are entrepreneurs such as Tom Singh and Hani Farsi. An expansion programme is being part-funded by their money.

"We've signed in Los Angeles," adds Mr Jones, whose temporary Soho House in Hollywood for Oscar fortnight proved both lucrative and a huge marketing success for the brand. I'm told a Miami Soho House is under construction, and in Berlin, Mr Jones is on "final terms".

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