Nationwide dispenses with Schroders

The investment house Schroders was sacked as the manager for £580m of pension assets for Nationwide Building Society yesterday because of poor performance.

The UK's largest mutual mortgage lender, Nationwide, has hired Barclays Global Investors and Fidelity Investments, to replace Schroders as managers of its investments.

"We constantly review our pension fund investments and found that Schroders consistently underperformed their target over a number of years," a spokeswoman for Nationwide said yesterday.

Schroders has lost more than £12bn in pension mandates since 2000 as its performance lagged and clients switched funds to more specialist managers. Institutional clients, including Vanguard Group, have withdrawn £2.5bn in the first half of this year. Schroders' share of the market has declined to 9 per cent last year from 13.5 per cent in 1999, according to a recent report from Morgan Stanley.

The fund manager revealed earlier this month that first-half profits increased by 69 per cent as it was managing to stem the exodus of clients, as well as attract new money into its bond funds and cut costs through job losses. The outflow of funds also slowed from £4.4bn in the first half of last year.

Schroders had managed a mixed portfolio of equities and bonds for the £850m Nationwide pension fund for the past five years. BGI will now manage £370m, or 45 per cent, for Nationwide in funds that will be invested solely in equities. Fidelity will oversee a £210m bond portfolio and UBS, which managed the fund alongside Schroders, will manage the remainder in index tracking funds.

"We have been disappointed by Schroders' performance and decided it wasn't part of that specialism we wanted," a Nationwide spokeswoman said.