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East Sussex tenders for three managers

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  • 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.

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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