Pension schemes are increasingly shifting their focus to de-risking, as improved funding levels drive change in fiduciary management priorities, research by Quantum Advisory has revealed.

In its latest Fiduciary Management Dashboard, the consultancy reported that assets under management (AUM) across the fiduciary market have continued to expand, particularly at the larger end of the market.

Indeed, its figures showed that total AUM for mandates over £1bn increased from £93bn in the first quarter of 2024 to £112bn in the first quarter of 2025.

The consultancy said that the trend for large schemes moving to a fiduciary management or outsourced chief investment officer structure dominated this growth.

At the same time, the dashboard showed that there was a “steady” appointment of new fiduciary management mandates that continued across most asset sizes, which was offset by schemes moving from buy-in to buyout.

The figures showed that the number of mandates increased for mandates under £50m from 347 in Q1 2024 to 371 in 2025.

Meanwhile, the number of mandates increased for mandates over £1bn increased from 22 to 27.

In terms of investment strategy, the consultancy said equity allocations had generally increased over a one-year period.

However, it identified that the asset allocation within growth portfolios varied “significantly” based on fiduciary manager and performance objective.

It said that over a one-year period, the allocation to growth assets remained broadly similar.

However, the consultancy said it had seen the allocation to growth assets decrease more recently, likely driven by the poor performance of growth assets, particularly equities, towards the end of the first quarter of 2025.

The consultancy said that fiduciary managers continue to target high hedge ratios, which likely reflects the desire to de-risk strategies and capitalise on high yields as funding levels improve.

The dashboard also showed that the number of mandates targeting a higher level of return has continued to reduce, representative of higher funding levels allowing mandates to de-risk their portfolios.

Additionally, it found that the risk transfer market typically reflects a seasonal trend, however, over the long term the number of risk transfer transactions for fiduciary manager mandates has increased.

The consultancy said this was particularly true for the most recent quarters, as the number of cumulative transactions has increased from six in Q1 of 2024 to 52 in Q1 of 2025.

In addition to this, the dashboard revealed that the majority of fiduciary managers continue to impose a minimum fee.

Over the past year, it found that the average fiduciary manager fee for smaller mandates marginally increased but remained competitive, but fees, however, varied “significantly” across managers and mandate size.

In terms of performance, the dashboard found that over the past year model fiduciary management growth portfolios have generally outperformed the diversified growth funds Quantum monitor.

Most delivered higher returns by taking on marginally more risk, while some fiduciary managers underperformed diversified growth funds at similar risk levels.

The dashboard also suggested that performance differences reflected varied positioning and dynamic tilts throughout the year.

The consultancy said that typically, fiduciary managers with stronger risk-adjusted returns held larger allocations to alternatives, though outcomes still varied notably between managers with comparable strategic allocations.  

Commenting on the dashboard, Quantum Advisory partner and head of investment, Amanda Burdge, said the update revealed some “notable” trends, “most strikingly a broad reduction in overall risk exposure”.

“We’re seeing a clear shift away from equities, with increasing allocations to fixed income and alternative assets,” she said.

“This move could be driven by a combination of factors - including risk management, the maturing nature of scheme liabilities, evolving market conditions, and regulatory pressures.”

Burdge said that the number of mandates targeting higher returns is continuing to fall, with the majority now aiming for a return no more than 1.5 per cent per annum above the liability benchmark.

She also noted that for many schemes, the priority has shifted from achieving high returns to closely matching liabilities with minimal risk, which she suggested was likely linked to improved funding levels and a growing focus on securing positions - particularly among schemes approaching buyout.

Adding to this, Quantum Advisory principal investment consultant, Paul Francis, said: “Fiduciary management has grown significantly in popularity over recent years.

“As the space becomes more competitive and complex, it’s essential that trustees and scheme sponsors have access to reliable, up-to-date data that helps them make confident, informed decisions - whether they’re appointing a fiduciary manager for the first time or reviewing existing arrangements.”

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