UK - The £1.4bn (€1.8bn) pension fund of UK local authority Cambridgeshire county council has awarded a £140m passive equity mandate to State Street Global Advisors (SSgA).

John Hopwood, chief investment officer of the fund, told IPE today that the mandate - awarded to replace a mandate previously held by UBS - is the fund's first foray into passively managed funds.

The fund opted for a passively managed mandate to avoid the risk of further underperformance, Hopwood said.

UBS was dropped last December year along with Schroders as a result of underperformance. (See earlier IPE story : UBS and Schroders sacked for poor performance).

At the time, details of a tender notice revealed that the fund planned to restructure £700m in equity holdings and was seeking three new asset managers to look after global equity, UK equity index and European equity mandates.

Hopwood commented: "We had a review of our investment arrangements and as part of that review we ended our agreement with UBS in December."

He added: "Also as part of that review, we decided that part of the equity mandate would be index managed and we opted for passively managed funds simply to avoid the risk of any underperformance of investment returns as measured against the index."

SSgA, which currently manages assets on behalf of 14 local authorities, said the assets would be invested in its managed pension fund UK equity index strategy, a pooled fund range for UK pension schemes which tracks the FTSE All-Share Index.

Kanesh Lakhani, managing director of SSgA UK comented: "Local authorities are increasingly recognising the benefits of passively managed funds and the role they play in a balanced portfolio."

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