Berkshire completes first set of mandates
UK - The Royal Borough of Windsor and Maidenhead has confirmed the appointment of three new investment managers for the £1.05bn (€1.17bn) Royal County of Berkshire Pension Fund, as part of a diversification strategy.
It has awarded Aviva Investors Global Services a global indirect property portfolio, while Macquarie Capital Funds (Europe) will take responsibility for an infrastructure mandate and Lyxor Asset Management has been appointed to an absolute return portfolio.
The council issued seven tender notices in July 2008 for a range of investment management roles, as part of a new risk management and diversification strategy to try and reduce the volatility associated with its existing allocation of 70% in equities. (See earlier IPE articles: Berkshire diversifies away from equities and Berkshire to increase alternatives exposure)
The first wave of appointments resulted in Aviva beating seven other providers to take on an active segregated global indirect property contract, which will also include advising on, but not managing, the UK indirect property portfolio, while Macquarie will be responsible for an active segregated portfolio of "infrastructure-related investments".
As the active manager of the pension fund's investments in absolute return strategies, Lyxor will be expected to produce a target return of between 3-6% above the London InterBank Offered Rate (LIBOR) on a "segregated account basis", while also independently pricing the underlying assets through a managed account platform.
However, tender processes are still ongoing to find investment managers to run additional portfolios in emerging market debt, active currency, high yield debt, and commodities, after the latest edition of the pension fund's newsletter 'The Quill' revealed the funding level of the Berkshire scheme had dropped from 99.9% in March 2007 to 72% in November 2008. (See earlier IPE article: Berkshire funding level drops to 72%)
Elsewhere, Carmarthenshire County Council has released two prior information notices (PIN) which highlight upcoming tenders for a property mandate and a custodian for the scheme.
The PINs follow the reappointment of HSBC Security Services as global custodian of the scheme in August 2008, for a further period of two years until the end of March 2010, as the scheme was in the middle of an investment review. (See earlier IPE article: £1.1bn Dyfed fund renews custody mandate)
Details included in the last annual report from the pension fund for 2006-07 showed it employs Barclays Global Investors (BGI) as its sole external investment manager, with the reminder of its assets run by an in-house team, while the scheme was valued at around £1.1bn at March 2007.
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