UK - Gloucestershire County Council has confirmed its £906m (€1.1bn) pension fund terminated its contract with Hermes' UK equity Focus Fund, as the investment had "already seen the best of its market".

The disinvestment of Gloucestershire's assets from the fund - valued at around £17.3m - was completed in April 2008, following the notice of termination issued in October 2007, on the basis that the "philosophy of the fund had reached its peak".

Confirmation of Gloucestershire's termination follows disappointing performance for the Focus range on behalf of the BT Pension Scheme, which reported the UK (large cap) and Japanese Focus Funds as "the most significant detractors from overall scheme performance" in 2007. (See earlier article: Focus Funds 'disappointed" BT scheme in 2007)

Gloucestershire has reinvested the money from the Hermes Focus Fund in UK equities through Standard Life, which is one of the scheme's two remaining UK equity managers along with UBS.

Since its decision to withdraw from Hermes Focus Funds, Gloucestershire has initiated its triennial review of fund manager performance and is also reviewing the current asset allocation of the fund.

It was agreed the investment strategy review would take place at the May committee meeting, to allow for the results of the triennial actuarial valuation to be completed, however a spokeswoman for the fund admitted that the meeting had proved "inconclusive".

As a result the strategy review, including what the fund should be investing in, and what approach to take, has been "rolled over" to the next scheduled meeting in August, with Gloucestershire council confirming that no tenders will be issued until the committee has decided what it wants to do.

Latest figures from the pension fund showed Standard Life outperformed in the first quarter of 2008 with a return of -8.7%, compared with the benchmark of -9.9%, however UBS Asset Management underperformed with a return of -11.9%.

Elsewhere the scheme's global equity portfolio, managed by Barclays Global Investors (BGI) returned -7.9% compared to a benchmark of -8.7%, while Acadian Asset Management outperformed with its emerging markets portfolio with returns of -9.5% compared to a benchmark of -10.9%.

In addition, Hermes' property portfolio performed well with a return of -3% against a benchmark of -3.7%, although the global fixed interest mandate, run by WAMCO posted one of the worst performances with a return of -2.7% compared to the benchmark of 0.6%.

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