UK- Torfaen County Borough council has put out to tender over half of its £730m (e1.14bn) Greater Gwent Pension Fund.
Following a three-yearly investment review back in June by the scheme’s actuaries and consultants Mercer Investment Consulting, the South Wales pension fund decided that its funds should be managed actively. Up until that now most of the assets have been managed on a passive basis.
Graeme Russell, deputy director of finance at Torfaen added that, in addition to assuming an active management style, the fund was going to adopt a more specialist approach.
The mandates out for tender comprise a £260m (e407m) active UK equity portfolio, a £80m (e125m) active European equity portfolio, a £100m (e157m) active bond mandate and a £50m (e78m) Far East equity mandate.
The new active investment strategy could spell bad news for the fund’s current managers BGI and Gartmore. BGI manages 60% of the scheme on a passive basis, and Gartmore is responsible for the remaining 40% in active UK equities.
BGI will continue to manage those funds not switched to an active portfolio while Gartmore has been asked to re-tender. BGI decline to comment on the developments.
Russell stated: “The decision does not reflect the past performance of BGI and Gartmore. The switch is both strategic and appropriate. If they have capabilities in the new areas they will apply for the tender”.
The tender is still in its early stages, with the contract notice having only recently been advertised. Final arrangements are expected to be in place by March 2003.