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Jupiter under scrutiny in Somerset revamp

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UK – Somerset County Council’s 600 million pound (855 million euro) pension fund has put out two tenders for a UK bond mandate and a UK property manager of managers mandate following an overhaul of its investment strategy.

An asset liability study conducted by Hewitt, Bacon & Woodrow, complimented by a risk management study and training of the investment panel have led to the scheme raising its allocation to equities and moving to a more specialised investment strategy.

Previously the fund invested 70% of its assets in equities (about two-three percent of which was in property). This portion was managed on a passive basis in-house, and actively by Jupiter Asset Management. J P Morgan Fleming Asset Management manages a portion in North American equities. Around 30% of the fund was invested in bonds and cash, once again managed on a passive basis in-house, and actively by Jupiter.

Now 80% will be invested in equities and property. J P Morgan will continue to run a North American equities portfolio, but with a local companies benchmark. A new portfolio investing in multinationals, worth approximately 45% of the entire allocation to equities will be managed in-house initially, and the remaining equity assets currently run by Jupiter will be put out to tender in September.

Investments in property are to increase to around 10% of the fund, and a mandate for 15 million pounds (21 million euros) has been put out to tender now.

The active property investment manager of manager mandate will be investing in pooled vehicles within the UK property market only, and the appointed manager will be responsible for devising and implementing an appropriate strategy for pension fund assets, as well as ongoing monitoring, regular reporting and liaising with the client.

Jupiter is also seeing its active bond mandate put out to tender. One active bond manager is expected to be appointed to manage a portfolio benchmarked against UK corporate bonds, UK fixed interest gilts and UK index-linked gilts. The size of the mandate is approximately 110 million pounds (157 million euros).

Tim Richins, assistant director of finance at the scheme emphasised that Somerset Council was pleased with Jupiter’s performance, and that the manager would be invited to re-tender.

Applications for the property and bond mandates must be received by the weekend of the 23 August.

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