Islington splits global equity mandate
UK - The London Borough of Islington has split a global equity contract valued at up to £250m (€275m) between two managers.
Islington initiated a tender search for global equity managers, excluding UK, in March 2008 following a review of its management structure including its 32% allocation to overseas equities through Capital International. (See earlier IPE article: Islington seeks managers and eyes GTAA after review)
The decision was made to re-tender the global equity contract, and following receipt of six tender offers the North London council split the £200-250m mandate between RCM and Newton Investment Management.
Assets were transferred to the two managers on 1 December 2008 and figures detailing pension fund performance in the fourth quarter of last year showed Newton has a 19% allocation of total assets, while RCM has 13%.
The report showed RCM’s mandate is to outperform the FTSE All-World ex UK Index benchmark by 3% per annum, gross of fees, over a three-year rolling period, although it noted the portfolio’s “inception valuation of £98.8m on 1 December had grown to £107m as at 31 December mainly due to currency appreciation”.
Meanwhile, Newton has an investment objective to outperform the FTSE All-World ex UK Index by 2% per annum, net of fees, over a rolling three-year period, and in its first month it had “benefited from exposure to safe havens like Switzerland and suffered from exposure to markets like Russia, Canada, Brazil and Norway”.
Elsewhere, the pension scheme - valued at £689m in March 2008 - completed the transition of assets from its small cap UK equities portfolio, managed by Framlington, to its in-house tracker fund, while the council’s pension fund committee has been advised to retain Goldman Sachs as the active currency manager following ongoing performance monitoring since March 2008.
Islington also revealed it intends to issue both UK and global property tender notices for the fund later this month as part of the new investment structure agreed in 2007.
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