Lothian taps three for currency overlay brief
UK – The £2.4bn (€3.5bn) Lothian Pension Fund has appointed three managers to run its active currency overlay mandate.
AG Bisset & Co, Record Currency Management and JP Morgan have been appointed to manage the contract. The scheme declined to comment on how the mandate will be split.
The selection process was done in-house following a “fairly competitive” tendering process, a spokesperson told IPE.
This new mandate is designed to manage the risk of the scheme’s overseas currency exposure.
The specifications of the contract are to implement a 50% passive hedge and actively target a 2% return from the nominal foreign currency exposure of the fund, according to a scheme statement.
The spokesperson told IPE that the scheme’s entire exposure amounted to £800m.
"AG Bisset has tremendous experience of managing currency overlay programs backed by a consistent long-term track record. The quantitative approach offered from Record Currency Management has similarly performed strongly over the long term and matches the fund's objectives in this area,” said the scheme.
“Complementing these managers is the blended approach from JP Morgan who with their experienced research team have demonstrated their capabilities with a strong track record."
In November 2005, the Fund awarded a £1.3bn global custody mandate to Citigroup Global Transaction Services – resulting in a loss for the incumbent Bank of New York.
Administered by the City of Edinburgh Council and part of the Local Government Pension Scheme, the LPF is a funded statutory scheme with defined benefits.
It has 62,000 members, 20,000 pensioners and provides pension benefits to more than 120 employers in and around Edinburgh.