UK - Cardiff County Council has appointed two active currency managers to improve the diversification of its local government pension fund.
The £770m (€852m) Cardiff and Vale of Glamorgan Pension Fund initiated a search for a manager to run a specialist £40m active currency mandate in May 2008, targeting a minimum return of London Inter Bank Offer Rate (LIBOR) +5% net of fees. (See earlier IPE article: Cardiff seeks specialist currency manager)
It has now split the £40m mandate equally between two managers, the US-based firm Mesirow Financial Currency Management and Goldman Sachs Asset Management International.
In September the Council approved a target asset allocation for the fund of 67.5% equities, 22.5% bonds and cash, and 5% each to property and private equity, however following the new appointments the pension fund has a 5% allocation to currency funded from the bonds and cash allocation, which now stands at 17.5%.
A spokesman for Cardiff Council confirmed that the funding of the currency mandates are almost complete, and that the move into currency was part of a diversification strategy for the fund.
He said: “We have property and private equity as alternatives, so currency is just another form of diversification, although we’re treating it more as a cash allocation but with opportunities for extra returns.”
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