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IPE special report May 2018

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Lincoln seeks global equity manager after strategy review

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  • Lincoln seeks global equity manager after strategy review

UK - Lincolnshire County Council has initiated a tender search for one or more managers to run a £200m (€231.9m) global equity portfolio for its local government pension scheme, following a review of its asset allocation strategy.

Lincolnshire Council agreed a new asset structure at a meeting of its pension fund committee in April, to be implemented "over a 12- to 18-month period, subject to market conditions", which included subsuming its current allocation to emerging markets into the overall global equity allocation, and deciding "the full 20% UK equity allocation be managed internally in the passive portfolio".

This review has now resulted in the council appointing HSBC Actuaries and Consultants to run a tender exercise to select "two or three global equity managers, with targets set between 2% and 4% out performance of the MSCI AC Index".

Lincolnshire currently employs Alliance Bernstein and Threadneedle as global equity managers, and the council stated it would "automatically shortlist the two incumbent managers".

The results of the recent strategy review will also see the global enhanced-index passive equity portfolio, run by Invesco, increased from 15.5% to 20% of the total fund. 

The global equity portfolio tendered is valued at around £200m, with a starting date of 1 February 2010 for the three-year contract, but it is the first of three tender searches expected to be issued by Lincolnshire.

Following the strategy review in April, the council agreed to run a tender exercise to appoint one passive bond manager and one absolute return bond manager, with a target of around cash +3-4%, while it also intends to search for alternative investment manager to run its alternatives portfolio with a target return of cash +3-4%.

However, the pension fund - which saw its value increase by £66m, or 7.5%, to £954.1m between 1 March and 31 May 2009 - has made the global equity manager search a priority over the summer, so it intends to start a bond manager search "over the autumn/winter and an alternatives manager in spring 2010".

Elsewhere, the London Borough of Waltham Forest has re-appointed Capita Hartshead to provide the administration and associated services to its £340m pension fund.

The council started the retender exercise in October 2008 by offering a £1.5m contract to provide "all functions associated with the administration of the prevailing local government pension scheme regulations", including the establishment of a specific website for the scheme.

Waltham Forest confirmed it had re-appointed Capita to the role, just as the latest figures from the draft statement of accounts showed the value of the pension fund dropped by more than £100m in the year to 31 March 2009, from £445.7m to £340.2m.

The draft report attributed the fall on "the extreme market conditions experienced following the "credit crunch" and its impact on real economic conditions. The magnitude of this economic recession was felt across all portfolios as confidence fell to extreme lows following the near collapse of the banking system, and reducing economic activity hit company profits and demand for property".

The closing date for tenders submissions to Lincolnshire's global equity search is 29 September 2009, and further information is available from HSBC Actuaries and Consultants.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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