GKN swaps Watson Wyatt for Dutch Cardano
UK - The £2bn (€2.64bn) GKN Group Pension Scheme has tapped Dutch consultant Cardano to manage a £300m discrete portfolio of active equity investments, previously held by Watson Wyatt.
Cardano, which last July set up shop in the UK, today said it will select and appoint managers on "a fully discretionary basis", meaning Cardano will have the power to both hire and fire portfolio managers, Phil Page, head of client management UK told IPE.
According to Page the approach is new and unusual: "It represents the fact that increasingly pension fund trustees have more and more issues to deal with: they have to think about things such as funding, regulation, choosing between alternative and traditional assets."
He added that the GKN trustees decided an investment professional who can pick portfolio managers and change them over time would deliver most value for its active equity portfolio.
John Hughes, chairman of trustees at GKN said in a statement: "Generating superior returns from equities is very important to the trustees. We want an active approach to managing this specific part of our investments and decided that it makes sense to appoint a full time professional team suitably motivated to deliver targeted results."
According the Worcestershire-based technology and engineering firm GKN, Cardano has aligned its interests with the pension fund's with its "remuneration geared to performance".
The fund said that current investment advisor Watson Wyatt will continue to be responsible for providing strategic and other investment advice to the GKN trustees.
It is the third mandate Cardano has won in the UK.
Last year, the newly-opened London office of Rotterdam-based Cardano won a mandate from the AstraZeneca pension fund, where the consultancy replaced Hewitt Associates as investment advisers to the £3bn UK pension scheme of the pharmaceutical group.
In October, it won an advisory mandate from the £1bn Southern Electric pension fund, part of the Electricity Supply Pension Scheme (ESPS), to work with trustees on all aspects of the fund's investment arrangements, also replacing Hewitt.
Page told IPE the fund is currently in talks with a number of other UK funds.
"We were very encouraged by the level of interest and response, we have had 30 to 40 discussions with large UK pension fund, and we were approached by half of those, so there is a real appetite for somebody who is doing something new," he concluded.
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