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Camden to consider real estate increase

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UK - The London Borough of Camden is considering the next stage of the restructure of its pension fund investment portfolio including a potential increase in property.

A report scheduled to be presented to the next meeting of Camden's pension sub-committee on 8 September 2009 by the scheme's investment advisor Hymans Robertson will outline the pension fund's current property assets and alternative ways it could implement an allocation to property.

One of the recommendations put forward by Hymans Robertson for the committee's consideration is the option of increasing its allocation to real estate from 10% of the fund to 12% following its recent restructuring.

In January Camden completed the first phase of its investment strategy review, which began in July 2008 with the tender of mandates for passive securities, fixed income and global equity portfolios as it had employed the same managers since 1992. (See earlier IPE articles: Camden starts first phase of portfolio restructure and Camden fulfils first stage of restructuring)

The pension fund, which reported an increase in value in the second quarter of more than £40m (€45.6m) from £621.9m to £667.5m, had previously revealed the next stage in the restructure would begin with a tender for a property manager.

Camden currently has investments in property unit trusts run by Schroders and UBS, which hold assets valued at  £20.3m and £18.1m respectively at the end of June, however latest figures published ahead of next week's meeting showed both managers underperformed their benchmarks in the second quarter with Schroders returning -7.2% and UBS -3.4%.

However the council told IPE it is still in the "discussion stages" regarding any proposed changes to the property allocation, including possible increases, and suggested any new managers would probably not be appointed until March or April 2010.

Therefore Camden pointed out this would mean the search for an alternatives manager, to fulfil a previous decision to move 10% of the fund into the asset class, would be unlikely to take place until the end of 2010.

Meanwhile the council confirmed it had appointed JP Morgan as the sole global custodian to the pension fund, following a decision to consolidate the services being provided by JP Morgan and BNY Mellon. (See earlier IPE article: Camden to consolidate custody services)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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