After an annual review and three stages of selection the London Pensions Fund Authority - formerly the Greater London Council pension fund - has appointed Mercury Asset Management (MAM) for its mixed portfolio of gilts and equities. Over the past four years this portfolio has grown to £450m ($720m) under Gartmore Investment Management.
Commenting on the decision, LPFA chairman Cholmeley Messer states: Gartmore have provided the fund with an excellent service over the years, but in the end they have not been able to meet our expectations on performance. The choice of a new manager was an extremely close one."
The selection process was "very difficult" and "who knows what you're choosing" according to LPFA chief executive Peter Scales. From an initial 30 expressions of interest in July, 14 contenders were invited to tender and four short-listed for the parade. Criteria included team composition, investment process and strategy. Whilst written submissions and presentations were of high quality, the MAM personal chemistry convinced the client that it could deliver performance expectation of 1% above the WM median on a three-year rolling basis, despite being downbeat on foreign equities.
MAM is appointed for a three-year term and joins LPFA's other fund managers: PDFM for a similarly sized portfolio of securities; Prudential with an equity-only portfolio of £150m, and Hillier Parker with property (£70m). Index-linked stocks and cash (£1.2bn) are managed in-house
Meanwhile, the London Fire and Civil Defence Authority (LFCDA) is seeking a service provider specifically for the Firefighters' Pension Scheme. Currently in the hands of the LPFA, the LFCDA pension panel feels it is time to go outside for administrative management of this non-funded scheme comprising some 6,000 active employees and 6,500 pensioners with annual expenditure of approximately £80m. Scales says no external adviser is assisting with the quality/price specification, but around 20 expressions of interest have already been received. Andrew Poray"