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Clwyd scheme tenders commodities, portable alpha

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UK - Due to a revamp, the £793m (€1.2bn) Clwyd pension fund, run by Flintshire County Council, is tendering a £15m commodities mandate and is looking for a portable alpha solution, possibly hedge funds.

A "further diversification from traditional asset classes, along with the use of new investment approaches, tools and products" are all part of a major overhaul of the fund's investments following a review in order to "improve returns further and reduce volatility". In April 2006, the funding level stood at 76% compared to 67.5% the year before.

To get portable alpha Clwyd is looking for solutions "based on a fund of hedge funds, multi-strategy fund or single strategy multi-manager fund," the tender states. "Delivering at least benchmark +4% net of fees consistently with a diversified low volatility alpha engine." It is unclear whether or not this hedge fund exposure will be in addition to the current hedge fund mandate held by Pioneer & Quellos.

Its new commodities portfolio is to return "at least 1% above the DJ AIG (or equivalent)" or aim for an absolute return target.

This year, the fund had already tendered a £40m GTAA mandate, £145m in unconstrained fixed income and equities and £120m in UK equities. The latter tender came after the fund's independent adviser Ralph Greening had noted in his annual report that the performance of both incumbent UK equities managers Barclays and Fidelity "caused sufficient concern for formal warnings to be issued".

Furthermore, Aberdeen Asset Management was appointed as manager for an Asia Pacific mandate of undisclosed size. In the county finance officer's September report it was noted that this change in managers was due to an "under-performance". It was, however, not disclosed who the previous manager was.

Also, Mercer Human Resource Consulting were re-appointed as the fund's actuary after a competitive tender.

The deadline for both new tenders is January 3 2007.


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