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Hertfordshire pension fund considers fiduciary mandate

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  • Hertfordshire pension fund considers fiduciary mandate

UK - Hertfordshire County Council Pension Fund has invited fiduciary managers to apply for a 10-year diversified alternatives portfolio worth as much as £300m (€360m).

The £2.4bn local authority pension fund said it was looking to gain exposure to a wide range of alternatives, with investments in infrastructure, timberland and insurance-linked securities all under consideration.

The fund said any applicants must be able to gain exposure to a "broad range" of alternative asset classes globally and listed a dozen investment options, noting that it would be open to asset classes not initially considered.

"Investment managers, fiduciary managers and consultants providing implemented solutions are encouraged to apply," it said, noting that the mandate's size would range between £200m and £300m, and that only segregated solutions would be considered.

While the council declined to answer questions on why a fiduciary approach was being considered, the tender notice said it expected the mandate to outperform Libor over three months by a "significant" margin, with as much as 5% returns above the benchmark targeted.

Mike Parsons, director of resources and performance at Hertfordshire said: "The tender is part of new strategy for the Hertfordshire Pension Fund, which is seeking to diversify asset classes and reduce risk by introducing alternative assets and management styles.
 
"We believe this approach will enable the fund manager to be very responsive to opportunities and provide the flexibility needed to exploit the very wide range of investment opportunities within the broad alternatives asset class."

Investments in a wide range of assets will be considered, including active currency, commodities, emerging market debt, hedge funds and high-yield bonds.

Additionally, exposure to infrastructure projects, insurance-linked securities, private equity, property, timberland and agriculture will also be possible.

The contract, initially awarded for five years, could be renewed for a further five years.

It is expected to be worth as much as £12.5m - although Hertfordshire said it reserved the right to select more than one manager.

Interested parties have until the end of April to request additional documents and should register their interest through the council's tender portal.

According to its most recent annual report, the fund invests more than two-thirds of its assets in UK and overseas equities, with £261m invested in pooled investment vehicles that also encompass its property exposure.

A further £430m of assets are invested in fixed income, with nearly half of the sum in fixed interest securities and less than £100m in index-linked fixed income.

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