Goldman Sachs AM loses E6.8bn in British Coal revamp
UK - The 10 billion pound (14 billion euro) British Coal Staff Superannuation Scheme has withdrawn 4.8 billion pounds (6.8 billion euros) from Goldman Sachs Asset Management -but says GSAM remains a "favoured manager".
"The British Coal Staff Superannuation Scheme today announces that it has expanded the number of fund managers it employs to manage its Scheme," the scheme said in a statement.
It said its main objective was to diversify the management of its assets to a broader number of asset managers "thereby reducing any single manager risk".
David Morgan, chief executive of Coal Pension Trustees which oversees the scheme, said the scheme has restructured "with a view to making better use of its risk budget", so the maximum mandate would now be 25% of assets.
GSAM previously managed around 80% of the scheme’s assets and will now manage around 25%. Its mandate will now be to manage around 2.2 billion pounds of actively managed assets. The scheme said that around 4.8 billion pounds has been allocated to other managers. The new structure uses 12 separate mandates placed with eight managers, as well as its private equity portfolio.
"The only name that we're releasing is Goldman," said Morgan. He said the scheme would retain existing managers LaSalle for property, Insight for cash and Schroders for UK small-caps.
The scheme would announce the names of the new managers after members have been informed late this year.
He said the decision to restructure was prompted by the expiry of the original six-year contract with GSAM in August 2002 - as well as an asset liability study conducted around 18 months ago by Watson Wyatt.
"We still regard them (GSAM) as a favoured manager," said Morgan. He said the shift of assets away from GSAM was not because of the asset manager's performance.
He said in a statement that GSAM "delivered positive relative performance across all the eight asset classes they have managed since we employed them”.
"GSAM continues to be our largest active manager and we are confident their investment processes will carry on generating outperformance for the scheme."
GSAM says it understands the scheme's need to diversify. Ted Sotir, co-head of GSAM Europe said that it would continue to devote "largely the same resources" to the account.
"They were our largest institutional account and they will remain our largest institutional account," Sotir said.
One feature of the rejig is the scheme's continued exposure to equities. Morgan admitted there was "very little change" to strategic asset allocation. The portfolio consists of 70% equities, 15% bonds, 10% property and five percent private equity.
The scheme is currently undergoing an actuarial review, Morgan added. He said the scheme's payments to its near 100,000 beneficiaries are guaranteed by the government's Department of Trade and Industry. The DTI, he said, backed the restructuring.
The restructuring only affects the British Coal Staff Superannuation Scheme, Morgan said. He had no comment on the other mining scheme he oversees, the approximately eight billion pound Mineworkers' Pension Scheme.
At the time of the fifth anniversary of the coal pension schemes' relationship with GSAM, Morgan said he was impressed with the quality of its service and commitment to its clients. "Year after year," he said, "performance has consistently exceeded our benchmarks."