UK - Bath and North East Somerset Council is seeking an investment consultant to provide services to the £2.14bn (€2.7bn) Avon pension fund.
The pension fund currently employs investment consultants on a project-by-project basis, however the pension fund committee agreed in June to appoint an investment consultant on a non-exclusive basis, as it recognised the fund's investment strategy is becoming "more complex" and the need for 'expert' advice is more important.
Following the June meeting, the committee invited five consultancies to compete for the contract, which was valued below the threshold of £139,893 needed to require inclusion in the Official Journal of the European Union (OJEU).
The contract focused on advice relating to the monitoring of investment managers and smaller projects, but "explicitly excluded" advising on an asset liability study and any other larger projects.
However from the five invitations only two firms submitted a tender, and following an evaluation the committee was informed they "did not provide value for money specifically in terms of monitoring the investment managers", while the fees quoted in the submissions meant the council would still need to re-tender the contract under the OJEU process.
The council revealed it has a provision of £50,000 in its 2008/09 budget for investment consultancy advice, and is now issuing a wider tender through the OJEU as it believes continuing with the 'ad hoc' approach to investment advice it currently employs is "time consuming' and "weighs on the council's limited resources".
However, instead of a restricted contract focused mainly on small projects and the monitoring of investment managers, the pension fund committee has agreed to tender for a full investment consultancy service, as "this is the most time efficient option in terms of the funds resources".
Documents from the recent committee meeting revealed the tender will include strategic advice for large projects such as the asset liability study, but it will not entail a full investment management monitoring service.
Instead, the appointed firm will be expected to provide advice on specific performance issues and access information regarding the managers where necessary.
Bath and North East Somerset Council is offering a five-year contract, with the option for a further two-year extension, for the provision of a full investment consultancy service, subject to an annual fee, an hourly rate and meeting attendance.
Meanwhile, the pension fund committee voted in favour of temporarily suspending the divestment from equities in its property portfolio, which is currently managed by Barclays Global Investors (BGI) on a passive basis until it makes its first property investments - in the UK only - in the last quarter of 2008.
A report from the scheme's investments manager, Liz Feinstein, revealed the original asset allocation in the property portfolio was 60% in equities, 20% in UK gilts and 20% cash - to reflect the short-term nature of the portfolio.
However, following the recent volatility in the markets, equity holdings in the portfolio have been liquidated at the rate of around £5m a month since January 2008, so at 31 July the allocation had fallen to 37% equities, 23% bonds and 40% cash.
Although Schroders had been appointed to run the UK property mandate - subject to the legal agreement being finalised - the committee was advised of "a strong argument to suspend the divestment from equities in the property portfolio as there was no short-term requirement to these funds", as the timetable for creating the property portfolio had been put back.
The committee voted in favour to suspend the divestment from equities at the rate of £5m per month subject to a review at the meeting on 19th December 2008, while the draft minutes from the last meeting revealed the council had decided to appoint Partners Group to run its overseas property portfolio.
Closing date for submissions for the investment consultancy contract is 16 December 2008, and further details can be obtained from Bath and North East Somerset Council.
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