LONDON - Hewitt Associates, a global human resources consulting and outsourcing company, said today that pension trustees should revisit the benefits of active equity investing, suggesting that there is a strong case to halt moves towards passive funds.

Lennox Hartman, Head of Hewitt's Manager Research team in the UK, explained:

"Active fund managers have emerged from their worst year for a generation. Investors' confidence in their abilities has been severely tested. 

"Falling asset values and under-performance from many active managers have dealt pension funds a double blow leading trustees to reconsider not just their allocation to equities, but also the merits of active over passive investing. However, the opportunities currently available to active managers are arguably greater than usual. At Hewitt, we firmly believe that it is possible to identify a group of actively managed funds which have the ability perform better, on average, than the benchmark and to achieve material returns."

Hewitt's recommendation comes amid rising demand among pension funds for passive investment options. However, according to Hewitt, moving to passive management can give away a considerable amount of upside as excess net returns of three percent a year from active investing would compound over ten years to deliver an additional 34.4% growth in assets.

Mark Howdle, UK Head of Equity Manager Research at Hewitt Associates, commented:

"The second half of last year was exceptionally difficult for active managers, as share prices were less driven by fundamental factors than usual. Market declines were sharp and indiscriminate, but equity markets appear to be inefficient enough to provide skilful managers with opportunities to generate some excess return. While market recovery will ease the troubles of pension funds, it will not solve them in isolation. Even a small active return compounds significantly over time.

"We would argue that now is the time to take care in selecting those active managers most likely to produce superior returns, while mitigating market risk. Those who judge active management on the basis of an unprecedented period, may regret the missed opportunity in years to come."

Hewitt's Manager Research team covers all aspects of manager research and monitoring, and carries out a comprehensive programme of fund manager visits, detailed analysis of live portfolios and in-depth risk analysis.

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organisations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping to make the world a better place to work. For more information, please visit www.hewitt.com 

For further information or an interview with Hewitt, please contact:
Colin Mayes, Hewitt Associates, 01372 733689 or colin.mayes@hewitt.com
Claire Maloney, Capital MS&L, 020 7307 5341 or claire.maloney@capitalmsl.com
Wendy Svirakova, Capital MS&L, 0207 255 5177 or wendy.svirakova@capitalmsl.com