Avon PF eyes global and emerging markets equities
UK - The £1.8bn (€2bn) Avon pension fund is searching for a global unconstrained equities manager to take care of 10% of the scheme's total portfolio.
Following a review of its investment management arrangements, the local authority pension scheme will rebalance its domestic/overseas equity allocation from a 60/40% split to 45/55%. The restructuring also sees Avon increase its emerging market equities allocation from 2.9% to 5% in a brief to be run by incumbent manager Genesis.
Speaking at an investment committee meeting, the scheme's investment adviser Dave Lyons, of HSBC Actuaries & Consultants, said Avon lagged other local authorities in its global equity allocation and were missing potential opportunities to boost returns.
Lyons' views were supported by Avon's independent investment adviser, Tony Earnshaw, who claimed past experience with global equity managers had been positive.
However, not all members of Avon's board were in favour of a move to global equities. Minutes from a meeting held in December last year revealed members have concerns over stock market investments in general, as well as worries about the fund's failure to consider socially-responsible investment as part of the global mandate.
The pension fund investment committee heard arguments claiming the best opportunities over the next 10 to 15 years would come from companies taking a more ethical stance, so the fund should avoid investing in companies which were not conspicuous in this field.
Avon said that although the move to global unconstrained represented an opportunity to consider socially-responsible investing, it would choose to look at this as a separate issue at a later date.
The scheme also revealed plans to review its hedge fund investments, which account for just over 10% of the portfolio, in August 2010.
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