Waltham Forest pension fund drops BankInvest as global equities manager
UK - The £532m (€638m) London Borough of Waltham Forest pension fund is to drop its global equities manager, BankInvest, following a performance review.
BankInvest, one of the largest fund managers in Denmark, will be ditched from the scheme’s overseas equities portfolio, which accounts for 31% of the fund.
Debbie Drew, treasury and pensions manager at Waltham Forest, said the scheme would tender an overseas global equities mandate - ranging between 23% and 35% of assets - later this year.
The fund will appoint two new equity managers - one a less constrained, high-conviction active global manager, the other a lower-volatility active global manager - with each holding half of the total allocation.
Assets will remain with Bankinvest until the new managers are selected.
As part of an overall investment review, the scheme is also looking to increase its exposure to emerging markets to as much as 15%. However, it said that it had not made a final decision on this yet.
Drew said if the scheme did increase its emerging market exposure, it would not be a separate allocation, but form part of a global equities portfolio.
In addition, the scheme is also looking to allocate 10% to infrastructure and a further 5% to hedge funds, which would be increased to 8% if the fund decided to drop global tactical asset allocation (GTAA).
The scheme currently uses Nordea for a GTAA portfolio, accounting for 3% of the fund.
The scheme will continue to invest 8% of assets into property, but is now looking to reach out globally.
The revised investment strategy follows the scheme’s 2010 triennial valuation, where the scheme reported a 60% funding level.
However, this has since dropped to around 55%, according to an interim funding review, following market volatility in the middle of 2011.
Drew said: “The pension fund’s interim funding review is just an indicative look at the funding level based on market movements over the period since the full actuarial valuation as at 31 March 2010, when the funding level at this valuation was 60%.
“In conjunction with the 2010 valuation, the pension fund produced a funding strategy statement, and this was the basis of the revised investment strategy that was approved in February 2011.”
The fund’s next triennial valuation will take place at the end of March next year.
Mercer currently serves as the scheme’s actuary and consultant. In November 2011, the fund also appointed an independent adviser to help meet governance requirements.
The pension fund is set to make final decisions on the investment strategy later this year.