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Falkirk targets passive manager for 'flexibility'

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UK - Falkirk Council Pension Fund is searching for a passive manager to run an equity portfolio worth up to £325m (€410m).

The £900m pension fund currently has an asset allocation of 70% equities - split between Capital International, Newton Investment Management and Schroder Investment Management - 15% bonds, 10% property and 5% private equity.

However, Falkirk is now searching for a passive manager, which it said would provide the scheme with more flexibility going forward, particularly in cases where it may need to terminate an investment manager contract as a passive portfolio makes it easy "to temporarily park other assets should we need to".

The tender is for an equity portfolio - mainly UK but with some global equities - valued at between £150m to £325m, which will be funded by reducing the scheme's investments with Capital International and Schroder, although the pension fund confirmed the managers are being retained.

Falkirk told IPE that the passive mandate is mainly to provide flexibility, but admitted that concerns over the ability of managers to outperform indices at the current time suggested a need for a "core portfolio" to have index-matching returns, then the active management added on top of that.

Elsewhere, North Yorkshire has released details of its search for a global property manager, following confirmation it would be moving into the sector in May. (See earlier IPE.com article: North Yorks pension moves into property)

The tender notice confirmed the £1.2bn scheme is looking to invest £60m in an indirect global property portfolio for a period of six years, with the option of a further three-year extension.

North Yorkshire's current asset allocation, according to it's statement of investment principles is 77% in equities and 23% in bonds, although the pension fund confirmed the property mandate would represent investment of around 5% of the scheme's assets.

The scheme is continuing its search for an overseas equity manager and recently reappointed Mercer to provide actuarial services for the scheme. 

However, documents relating to the latest meeting of the North Yorkshire Pension Fund Committee revealed it has commissioned a review of its two global fixed income managers - Crédit Agricole Asset Management and European Credit Management (ECM) - following concerns over poor performance. (See earlier IPE.com article: North Yorks re-signs Mercer and reviews fixed income)

Meanwhile, the London Borough of Hammersmith & Fulham has appointed Barnett Waddingham to provide actuarial services for its £460m pension scheme on a six-year contract, replacing Hewitt Associates.

The fund, which had a funding level of 70% and a deficit of £196.1m at the last triennial valuation in March 2007, recently awarded dynamic asset allocation mandates, with a combined value of £120m, to Ruffer LLP and Baring Asset Management, in an effort to diversify away form its previous investment strategy of 70% equities and 30% bonds. (See earlier IPE.com article: Hammersmith & Fulham award 'dynamic' mandates)

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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