UK - The Royal Borough of Kensington and Chelsea (RBKC) has appointed Northern Trust as the custodian to its local government pension scheme.
The council had previously employed HSBC to manage the custodial services of its £409m (€480m) pension scheme, however it re-tendered the contract in December 2008, as the existing mandate was scheduled to expire in summer 2009. (See earlier IPE article: Kensington seeks custodian and increases equities)
RBKC has now confirmed it has awarded the £43,000 five-year contract to Northern Trust out of six applicants, and based its decision on performance against the set criteria of services provided and price.
Minutes from a meeting of the council's investment committee in February revealed the pension fund is considering a move to manage its overseas equity portfolio on a global rather than regional basis, with the potential split of 45% UK equities and 55% global.
Documents from the meeting showed that while the committee felt "it might be the right time to consider taking this approach forward", it needed to understand the transaction costs in implementing the changes.
In addition, the RBKC committee members agreed at the meeting to defer a decision on switching some of the pension fund to an absolute return mandate to a "later date" to allow time for the markets to recover from recent volatility.
Concerns were also raised about the recent underperformance of some of the existing fund managers appointed by the fund, in particular Alliance Bernstein.
However the members were told its adviser, Hymans Robertson, had a positive view of the manager and warned it would be "inadvisable to crystallise the recent losses", although Hymans confirmed if its view changed the committee would be immediately informed.
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