The London Borough of Lewisham has awarded one-third of its pension asset portfolio to Schroder Investment Management. These assets, worth £138m ($221m) are heavily skewed to index-linked gilts, with some property. The remaining £272m, benchmarked to the three-year weighted rolling local authority rate, has been reassigned to Morgan Grenfell (MG), the existing manager, after a very competitive tender process.

Commenting on the rationale, David Tucker, the borough's treasury adviser, explains: The fund is relatively mature, comprising local authority occupational obligations, and therefore its reliance on UK equities, where volatility is high, was implying a higher level of risk". To dampen down the volatility it was advisable to reduce exposure to certain asset classes and hence for practical reasons the fund was split into two. From the borough's viewpoint it is not a cutback for the successful manager, rather a reaction to changing needs."