UK - The £741m (€1.1bn) Gwynedd council pension fund is looking to invest in private equity via fund of fund managers to help address its £129m deficit.
Following a strategic review in early 2005, advisors Hymans Robertson had suggested a 5% allocation to private equity. This advice has led the fund in North Wales to tender for a mandate worth around £35m.
In their assessment of the change in asset allocation, Hymans' partners George Henshilwood and William Marshall said they would be less enthusiastic if a fund of funds manager only captured the asset class's median return.
But they noted that most managers are currently doing deals based on projected returns of 15%-20% a year.
Currently the fund's portfolio is invested in equities (74.6%), bonds (13.3%), property (8.8%) and cash (3.3%). A spokeswoman for the fund confirmed that the allocation to private equity would be at the expense of the fund's public equity exposure.
At the last actuarial evaluation in 2004 the deficit had been registered at £174m with the fund being only 74% funded.