The Avon Pension Fund is looking for managers to take on a £165m (€211m) mandate to run a portfolio of hedge funds.

The UK local authority pension fund – run by Bath and North East Somerset Council – has put out an EU tender for companies to bid for the mandate to set up, implement and manage a diversified portfolio of hedge funds.

The pension fund, which already has a 10% allocation to hedge funds, according to data from its website, says the proposed portfolio will equate to around 5% of its assets.

No one at the pension fund was immediately available to comment on the tender.

Five percent translates as approximately £165m at current levels, the fund said in the tender notice.

The return target for the portfolio is three-month LIBOR plus 3%, or 6% – whichever is the higher – net of fees over rolling three-year periods.

Volatility should be one-third to a half of equity markets, the pension fund stipulated.

The contract is set to last for 60 months from the date of the award.

The deadline for receipt of requests of documents or for accessing documents is midday on 22 December.

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