UK – The £2bn (€2.9bn) Leicestershire County Council Pension Fund has axed Barclays Global Investors as manager of a roughly £400m multi-asset class passive portfolio following a review of the scheme structure.
The strategic review – carried out by the pension fund management board in 2005 – resulted in a decision to discontinue the scheme’s passive management portfolio, which has been in place since 1990.
“The board felt comfortable with returning that element of passive management to active management,” Leicestershire County Council investments manager Colin Pratt told IPE.
“It accounts for 20% of the total fund,” he continued.
The restructuring saw the break-up of the Barclays portfolio, and the appointment of three new managers.
Goldman Sachs’ quantitative team was awarded a £270m new global equity mandate.
The remainder of the passive portfolio was split among three of the fund’s existing managers – Standard Life (an additional £70m for its UK equity mandate), Morley (£35m for its bonds/property portfolio), and UBS Global Asset Management (£27m for its multi-asset class brief).
As part of the review process, the pensions board also established an active currency programme with Mellon Capital Management and Millennium Asset Management each managing £340m, said the scheme in a statement.
Millennium will also manage a £680m passive currency portfolio, which will look to hedge out 70% of the fund’s exposure to currencies achieved by its weighting in overseas equity, the scheme added.
Barclays assisted in the restructuring of the fund, where it acted as transition manager. According to Leicestershire, this reduced costs “significantly”.
Scheme adviser Hymans Robertson was involved in the tendering and selection process. Tender notices were posted in June/July 2005, and the new management arrangements took effect in April.
“The fund looks forward to long and mutually beneficial relationships with the three new managers,” said a Leicestershire statement.
In other news, Millennium was also awarded a £150m active mandate by the £8.5bn Strathclyde Pension Fund.
According to a Strathclyde spokesperson, this was a new mandate. Hymans Robertson conducted the search.
Mellon Capital Management and Record Currency Management were also each awarded £150m active currency overlay mandates.
Implementation will be in the second half of 2006 once contracts have been concluded, said the Strathclyde scheme. Contracts will be for or an open ended period.
This brief combined with those from the Leicestershire scheme means Millennium has been awarded more than £1bn from UK local authority pension funds in currency overlay mandates.
Millennium’s UK team is headed by former Schroders executive Mark Astley and former Goldman Sachs asset management executive Michael Huttman, who is also chief investment officer.