Flemish government sticks with locals
The Flemish government has decided, for the time being not to outsource any of its $415m civil service pension fund to external fund managers to improve its performance
Instead it is turning to Belgium's more passive global custody banks - Kredietbank, Generale Bank and Banque Degroof - to look to the global custody and international securities markets for it.
The reason, according to Georges Stienlet, chairman of the pension fund board, is because: We are looking for a very special formula which must give us absolute security, since we are talking about public money, and a very low risk. At the same time we want a negotiable rate of return that is roughly equal to stock market rates and our capital must always be guaranteed and not tied up for more than about five years. We have had approaches from internationally renowned external fund managers - in London and elsewhere - and we do not rule them out necessarily. If they can come up with the right formula - and we have indicated to them what this is - we will consider it, but it must be very price-competitive and we are not interested in emerging markets. We have not looked at any external fund managers or decided not to do so. It depends what they can offer. But, for the present, we are happy to stay with our global custody banks."
Predictably, the Brussels-based fund is very conservatively managed and Stienlet explains "80% of our portfolio is in bonds and short-term treasury paper - the rest in stock."
If the Flemish government were to be persuaded to go for an externally managed global mandate, it would have to be a value management approach that was very price-competitive. Bob Crew"