It’s been puzzling me recently. In a recent web call, BlackRock were bullish about the market reckoning it likely a third of DC assets would move to CDC (with evidence from Europe that it could be more). It seems that asset managers are waking up to change afoot

Yesterday I was with an asset manager who sees its  footprint in the sand of “decumulation” with an endgame in annuities.

I have spoken with other asset managers who see CDC as a return to with profits.

I can understand how many asset managers feel puzzled as so far there has been no announcement from any of the Workplace CDC players who will get the mandates. There is a good reason for this, none of us are authorised.

Of course there will be much that will need to fall into place before asset managers can see the future. We need to see CDC proprietors properly funded to be authorised. We need to see clients committed to a CDC proprietor’s proposition and comfortable with the governance on offer, before a multi-employer opens its doors.

This will mean employers, trustees and proprietors on the same page and most likely there will be partnerships in the early months and years.

It feels right now as if there is an expectation of change but no-one has quite thought through who will win and who won’t.

I have not seen the unions so behind pensions as a means to reward their members as they are with CDC. When pensions become a part of wage negotiation again, what is now expectation will become the reality of change.

This is of course outside the conferences that are organised to meet the current needs of the pension industry. When we start getting CDC conferences we will know that change is on its way.

But much that restricts DC investment will be lifted, most especially the emphasis on lifestyling pension pots for cashing into annuities or bank accounts from as young as 55. This must make asset managers who manage for growth excited.

For the most part, CDC is about growth and though there will be some guard-rails to ensure that should a CDC scheme find itself just managing money for pensioners , the idea is that “whole of life” means “whole of life” and CDC scheme’s asset allocations are likely to be heavily slanted towards growth assets. There will not be the pressure on liquidity there is in individual DC, nor will there be an eye for the short term. CDC funds can have an infinite time horizon.

My suspicion is that the winners will be those who can deliver, within the constraints of the workplace pension charge cap, substantial diversification not just into listed and unlisted equities but into alternative growth strategies.

There will of course be investment in passive growth funds but I see the opportunities for asset managers who do just that , having an active part to play in the CDC funds of the future. If stock-lending is allowed, passive fund managers (led by Fidelity) can offer management for nothing. The capacity of asset managers to invest where added value can be found, could be boosted by indexed funds doing the heavy lifting. I remember saying this to Robin Powell more than a decade ago

I suspect the likely winners in CDC will be the asset managers who are prepared to invest in the idea early on.

This is not a market in which asset managers can sit back and have money dished up on a plate for them to manage. Fund and Asset Managers will needs be part of the  project to get CDC up and running . The next six months will be as critical to investment managers as it will be to the new CDC proprietors.