UK - The London Borough of Hillingdon is seeking a multi-asset passive manager for up to 50% of its fund, after the value of its pension scheme dropped by more than £30m (€37.9m).

Details of a tender notice show the successful applicant will be required to passively manage a portfolio of UK and regional international equities and gilts for its local government pension scheme.

The contract will involve managing up to 50% of the assets of the £550m Hillingdon Pension Fund, excluding property investments, although the starting value will be 20% of the fund, or £110m.

The quarterly investment management report presented to Hillingdon's pensions committee earlier this week revealed the committee had agreed on March 12 2008 to revise the current investment strategy and to appoint a multi-asset passive manager.

Documents published on the council's website stated the existing fund managers - UBS Global Asset Management, Goldman Sachs Asset Management, Capital International and AllianceBernstein - had been made aware of the intention to change the investment strategy.

However, it claimed "detailed discussions" on changes to their portfolios would not take place until the start of the procurement exercise "in order to align the timing of the revised investment structure".
Additional information from the latest committee meeting revealed the pension fund lost over £30m in the last year, falling from £576.6m at the end of March 2007 to £542m in 2008.

The presentation of the annual accounts for 2007/08 pointed out the last financial year has seen "excessive market volatility" causing the fund to experience "both positive and negative swings in value".

It noted "on a number of occasions in the latter quarter of 2007 fund value exceeded £600m", however it admitted the effects of the credit crunch, an increase in oil prices and fears of a global recession all contributed to the fall in fund value.

In addition, the performance report for the first quarter of 2008 showed the fund performed poorly, delivering a negative return of -8.47% overall, compared to the benchmark of -7.2%.

The latest actuarial valuation of the fund on March 31 2007 revealed the scheme was 92% funded - at a value of £577m - which resulted in a plan to increase employer contributions from April 1 2008 in an attempt to recover the deficit within 25 years.

The closing date for tender applications is August 11 2008.

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