Newham makes first move towards diversified alternatives
UK - The London Borough of Newham pension fund is planning to allocate approximately 10% of its assets in a diversified alternatives strategy and has now taken the first step towards appointing a manager.
Details of a tender statement issued by the pension fund state the fund is looking to appoint a diversified alternatives portfolio manager to take care of approximately 10%, or £50m (€58m), of its assets.
One or more managers will be required to ensure the mandate is complementary to its existing holdings and deliver a target return of UK 3-mth Libor +4-6% over a rolling five-year basis, according to the notice.
Further details of the Newham's pension fund business plan state the council fund is seeking to reduce its 66% equity holding to a strategic allocation of 60% and shift some of those assets into the relatively new concept of the diversified alternatives portfolio - a variant on the diversified growth fund but focused only on alternative investments - instead of following their earlier plans of investing 10% in hedge funds.
Similarly, the pension fund is shifting £10m from its property allocation in the short-term to cover a shortfall in assets related to cash calls for infrastructure and private equity.
Contracts held by JP Morgan and Record Currency Management are also being terminated, according to Newham pension fund documents, after delivering relative returns of -22.6% and -32.7% in 2008 on their mandates.
Parties interested in the diversified alternatives mandate have until to noon on 4 May 2009 to submit documents.
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