UK - The £2.1bn (€3.1bn) Avon Pension Fund has awarded a £210m hedge fund mandate to five managers alongside a UK unconstrained equity mandate and an active corporate bond mandate worth £100m each.
It is the first time the fund has invested in hedge funds. To achieve the desired risk/return profile and provide flexibility in the future the fund chose to split the mandate between a series of managers, chief investment officer Tony Worth told IPE.
The managers are: Man Investments (45% of the hedge fund portfolio, Gottex (25%), Signet (20%), Stenham (5%) and Lyster Watson (5%).
Following an ALM study the fund decided to change its corporate bond mandate from a passive to an active approach and appointed Royal London Asset Management for this task.
Part of the re-structuring of the fund's portfolio is also the awarding of a UK unconstrained equity mandate to TT International because of the firm's performance record and its business model, Worth explained.
As part of the overhaul Wellington Management International and Capital International lost their mandates with the funds at the end of last year.
In both cases poor performance was cited as the reason. They managed £240m in overseas equities and £660m in active multi-assets respectively.
At its last meeting the pension fund committee decided also to terminate the £306m specialist UK equity mandate with Threadneedle due to "deterioration of performance".
The assets will be shifted to the passive multi asset fund managed by Barclays Global Investments, according to the minutes of the meeting in March.