UK – The 34 billion-euro BT Pension Scheme’s allocation to hedge funds is to be invested via a Guernsey-domiciled offshore vehicle run by Hermes.
Hermes Pensions Management, the asset manager owned by the BT scheme, has launched an offshore fund of hedge funds to cater for the BT scheme’s allocation to hedge funds.
Listed in Dublin but domiciled in Guernsey, Hermes Absolute Return Ltd. will initially invest the 540 million pounds (771 million euros) allocated by the scheme to hedge funds.
The fund has been set up by head of strategy Kames Walsh and started on November 1.
Hermes said it hoped other pension funds would follow BT and invest in the fund, which has been specifically designed for pension funds.
The asset manager also argued the new fund charged “substantially lower fees” than competitors while applying “extensive level of due diligence”.
Charlie Metcalfe, deputy chief executive officer at Hermes, said: “Our cost advantage is significant, coming from our ability to leverage off the substantial in-house infrastructure already in place at Hermes and the healthy size of the BT Pension Scheme’s initial investment.”
Hermes has also appointed the Guernsey subsidiary of Royal Bank of Canada, RBC, to provide fund administration services for the hedge fund of funds.
The RBC subsidiary will provide custody, corporate trustee, fund accounting, record keeping and banking services.
“Partnering with a provider who has strong technological and operational capabilities as well as in-depth and comprehensive knowledge of the fund of hedge fund industry were key factors in our decision,” said Tony Allen, director of securities operations at Hermes.