The £1.5bn (€1.6bn) Cornwall Pension Fund has appointed Man FRM, a hedge fund, to manage a £120m allocation following an investment review.
The local authority scheme is set to increase its allocation to hedge funds dramatically after it decided to place more focus on alternative asset classes.
Prior to announcing the mandate, the fund had a 1.4% allocation to a fund of funds strategy operated by Permal, but it will now allocate directly to Man.
As part of the scheme’s continued investment strategy overhaul, selecting a hedge fund manager was first priority alongside searching for additional opportunities in illiquid assets such as infrastructure, where it also allocated 1.4%.
Following on from the strategy review, the fund decided to increase its hedge fund allocation to 8% and appointed UK advisory firm JLT Employee Benefits to run a full open-market procurement exercise.
Investment manager at Cornwall Pension Fund, Matthew Trebilcock, said accessing the asset class via Man provided more transparency for the fund.
“This feature is not always available through the traditional fund of funds offering and was a major consideration for us,” he said.
Cornwall will invest in Man’s solution designed for Local Government Pension Schemes (LGPS), providing additional transparency and legal control of assets, with a sliding fee structure depending on collective assets.
“In addition, the sliding management fee structure provides a real collaboration opportunity for all LGPS funds in the hedge fund asset class,” Trebilcock added.
Man Group president Luke Ellis said: “We fully acknowledge the current pressure the LGPS funds are under to achieve cost reductions, and we have embraced this by treating the LGPS as a single investor with regards to pricing but as quite different investors with regards to the eventual solution provided.”