Brent to up infrastructure assets by 5%
UK - The London Borough of Brent is looking to increase its exposure to infrastructure in its £400m (€436m) local government pension scheme (LGPS).
At the moment the pension scheme employs Henderson Global Investors to manage a £2.2m infrastructure portfolio as part of the investment manager's fixed interest mandate but it has now decided to increase its allocation.
Brent Council is offering a £20m infrastructure investment mandate, equivalent to around 5% of the fund's value, for one or more managers on a pooled or segregated basis with the aim of achieving returns of approximately +10% Internal rate of return (IRR), net of fees, over a 10-year period.
The tender, conducted with the help of bfinance, will be decided on performance by mangers against a number of criteria with most importance placed on quality, although technical merits and price are also key factors.
Brent confirmed that Henderson will continue to run its existing infrastructure mandate and would be welcome to apply for the new contract, although the council pointed out the new mandate is "much broader", while the initial exposure was "more of a toe in the water".
Meanwhile the council confirmed that it had terminated its currency contract with Mellon, following a decision at the last committee meeting in November where the poor performance caused the council to "end the currency mandate and to await officers' advice on how best to proceed in relation to the Global Tactical Asset Allocation (GTAA) mandate", which is also run by Mellon.
A spokesman for the council said: "We do still get exposure to their [Mellon's] currency product through the GTAA mandate. So given the sheer volatility in this area and poor performance we felt we needed to reduce our risk and place the money in other areas."
Documentation from a recent meeting of the Brent Council Pension Fund sub-committee in September suggested the increased allocation to infrastuture, and an increased stake in a fund of hedge funds run by Fauchier Partners from 5% to 10%, would be funded by reduced investments in equities, fixed interest and currency.
The closing date for applications for the infrastructure mandate close 19 February 2009, and further information can be obtained from bfinance.
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