Avon PF to place 1/8th in multi- manager property
UK - Bath and North East Somerset Council is looking to alter the asset allocation strategy and passive equity holdings of the Avon pension fund, to accommodate diversification into UK and global real estate.
Details of a tender notice issued by the UK local authority reveal the £2bn (€2.68bn) is creating two real estate mandates worth £125m each to invest in multi-manager funds on a segregated basis.
Officials of the Avon pension fund indicated in the minutes of a November 2007 meeting they were considering shifting assets out of an equity portfolio managed by Barclays Global Investors and earlier questioned whether to create a "strategic policy on property" which could either be outsourced to external managers on a discretionary basis or managed in-house.
The Investments officer, Tony Worth, commented at the time the fund's officers "had a marginal preference for a discretionary management contract" and have opted for the external route into real estate, as the contract notice states the mandates will be required to provide exposure to core, value-added and opportunistic "vehicles"
The UK property mandate is required to outperform a custom IPD UK sector benchmark with 1% net of fees over five-year rolling periods.
The overseas (non-UK) mandate will be required to achieve a return of 7-10% per annum over the long-term.
Tenders must be submitted by March 10, and it is anticipated assets will not be invested until the third quarter of 2008, based on information provided in the minutes of the November 2007 pension fund officials' meeting.
Pension fund officials were not available for comment at the time of publication.
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