Lewisham allocates £20m to fund of hedge funds
UK - The London Borough of Lewisham pension fund is seeking a hedge fund of fund manager and a global equity manager following a restructure of the pension scheme.
It is offering a £20m (€27m) mandate for a fund of hedge fund manager to run a multi-strategy fund of hedge fund allocation, which is expected to deliver above cash returns with "lower than equity market volatility".
However, Lewisham noted it is specifically looking to award the mandate, equivalent to around 3% of the total value of the scheme, to a "top performing" hedge fund of fund manager with an existing institutional client base.
In addition, the £735m (€950m) scheme is looking to hire a manager for a £100m (€132m) global equity mandate, including the UK, to run alongside the fund's existing global equity mandate, which offers a value style investment approach.
Lewisham said the mandate, valued at around 14% of the fund, would be managed actively with an outperformance target of 1.5% against the MSCI ACWI on a three-year basis, and said it is particularly interested in submissions from managers with an investment style which is "complementary" to the value approach already employed.
However, the fund highlighted potential applicants should address how the currency exposure associated with global equity investment would be managed, including whether the risk could be hedged.
The tender closes on March 25 2008, at which point Lewisham will invite between five and eight managers to compete for the mandates, with the scheme placing 80% of the focus on the quality of the proposals and just 20% on the cost.
According to the scheme's annual figures for the 2006/07 financial year the fund had previously allocated 35% of its fund to UBS in a multi-asset mandate - consisting of fixed interest and UK equities - while Alliance Bernstein managed 29% of the fund in a global equities mandate excluding the UK.
The figures also revealed 24% of the scheme was allocated to UK equities, while 1% was invested in private equity, and 11% in property, with total net assets at March 31 2007 reaching approximately £735m.
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