GERMANY - Baden-Badener Pensionskasse (BBP), a €246m pension fund for employees at public television and radio stations, has hired German consultant Faros to search for a global custodian and a provider of so-called "master funds".
Gunther Baum, board member at BBP, told IPE that his scheme had decided on a global custodian and a master fund to "boost the efficiency and transparency of the investment process and to reduce costs".
A German master fund permits an institutional investor to centralise back-office administration of his funds - for example reporting and risk monitoring. Baum said BBP had its assets invested in five German institutional funds known as Spezialfonds.
Uwe Rieken, managing partner at Faros, said the selection process for BBP's master fund provider and global custodian would be completed by the end of October.
"At the beginning of November, a selection for each will be made and then comes the implementation phase, which will last until the end of the year," Rieken said.
Major master fund providers in Germany include Universal Investment, the market leader, INKA, which is part of private bank HSBC Trinkaus & Burkhardt, Deutsche Asset Management and Metzler Asset Management.
The global custodians likely to vie for the BBP mandate include foreign players like JP Morgan, BNP Paribas, State Street and ING.
German institutional investors going for a master fund solution have been known to re-evaluate their asset managers and use investment consultants for the effort.
Asked whether BBP would retain Faros beyond the current selection mandates, Baum said "it's something that we would consider, but for now, Faros has only been hired for this project".
Faros, a Frankfurt consultant specialising in pension funds, was founded in the autumn of 2003.
At the end of 2004, BBP had around 13,000 contributing members to the fund. Its assets stood at €246m.
BBP's asset allocation at the time was: 77.3% in fixed income, 19.7% in equities and 3% in real estate. It put its average annual return between 1999 and 2004 at 4.2%.