East Sussex tenders for three managers
UK - East Sussex Council is tendering three investment manager mandates for its £1.39bn (€1.6bn) pension fund.
Notices published by the council revealed it is offering a £100m UK property multi-manager contract, a £150m absolute return portfolio and is seeking one or two active global equity managers to run between £200-300m of assets each.
The property mandate is for a segregated UK multi-manager property arrangement to run up to 6% of the total funds assets, equivalent to around £100m, although currently the pension fund has approximately £110m in UK property unit trusts.
In addition, East Sussex is seeking “one or two” active global equity managers to run up to 30% of the pension fund assets, to be provisionally benchmarked against the MSCI All-Countries World Index with an outperformance target of 2-4% a year.
The scheme also intends to invest up to 10% in a “traditional multi-asset absolute return mandate”, and although the council has not finalised the performance objective it is expected to require excess returns over three months sterling LIBOR by around 3% or more over a rolling three to five year period.
Figures from the pension fund’s draft annual accounts showed that at the end of March 2009 the scheme had £134.5m in fixed interest assets, £381.9m in equities, of which £203m was in listed overseas equities, while £9.4m was in index-linked securities, £770m in pooled investment vehicles - incuding unit trusts - and £90m in cash.
The asset allocation of the fund at the end of the financial year saw the scheme’s equity holding increase from 66% to 76%, funded by a drop in the bond allocation from 14% to 10%, while property decreased from 10% to 8% and cash holdings slipped to 6% from 10% a year earlier.
Details of the annual accounts also revealed the pension fund fell by 17.05% from £1.67.8n to £1.39bn as a result of the downturn in equity and other markets, while the county council’s “net liability for future pension payments” in line with FRS17 accounting rules, increased from £169.8m to £262.6m, and council contributions in 2009/10 are expected to reach £23.5m.
East Sussex appointed Legal & General Invetsment management (LGIM) in March to run a £275m passive UK equity mandate, while in May the council was criticised for considering the potential use of pension fund assets to establish a bank to help local businesses. (See earlier IPE articles: East Sussex bank plan is ‘madness’ and LGIM picks up East Sussex mandate)
The closing date for the property tender is 8 September 2009, while both the global equity and absolute return manager searches end on 24 August 2009, and further information is available from Hymans Robertson.
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