FRR re-awards transition broking brief
FRANCE - The €29.1bn, Fonds de Reserve pour les Retraites, the French Pension Reserve Fund, has re-awarded a transition broker contract to Goldman Sachs International.
In April 2006 the contract signed in 2004 was re-tendered "anticipating that the €16bn transaction volume in the initial contract would be surpassed sometime in 2006", a press release stated.
Goldman Sachs came out successful in the selection process again. It was awarded a €25bn contract for a period of three years.
Last week the FRR reported an increase of assets of €1.5bn in Q3 after it had seen its assets fall by €500m in Q2 due to adverse market conditions.
Between January and October the fund (including cash) returned 6.8% while the €25.9bn of invested assets (equities and bonds) returned 6.7%.
Currently, 29.2% of the fund's portfolio are invested in bonds, with the bond portfolio returning -1% since January and 59.8% are invested in equities (return: 9.7%). The rest of the assets will be allocated to alternative investments under the new strategic asset allocation outlined earlier this year.
In spring of 2006 the fund had stepped up the activation of the bond mandates. When it reported a negative -4.4% return in its bond portfolio in June, the fund stated: "The decision made by the FRR to activate its bond mandates gradually in light of unacceptably low yields has allowed the Fund to limit the impact to date of the deteriorating global bond market climate on its portfolio against a backdrop of steadily rising long-term interest rates over the last six months."
Currently the fund's annualised performance since the first investments were made in early summer 2004 is 9.8%. "The fund's absolute performance remains very positive since the FRR began investing, and has turned around in 2006 since last summer, thanks to the rebound in equity markets," the FRR commented.