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MLIM loses e637m mandate as BAA changes strategy

UK- Merrill Lynch Investment Managers has lost a £400m (e637m) UK equities mandate following the decision by the British Airports Authority pension fund (BAA) to cut its UK exposure in favour of global equities.

BAA’s £1.5bn (e2.4bn) scheme has divided the £400m equally between UBS Global Asset Management and Capital International to invest in global equities.

The decision to change tack follows an ALM study recommending a new strategic asset allocation.

Prior to the change, BAA had 15% in fixed income, 20% in overseas equities and 65% in UK equities. Following the readjustment, the fund will have 30% in fixed income, and 35% each in UK and overseas equities.

Eric Hunt, group pension manager at BAA, says “we had a very high equity exposure, predominantly to the UK, and we decided to make a greater allocation to bonds. We’re also going to increase our overseas exposure and this is just part of that change.”

BAA looked at 11 managers and UBS and Capital prevailed from a shortlist of five.

Hunt adds that performance had no bearing on the decision. “Our long term performance is actually very good. We just took the view that most people are moving from equities to bonds, most people are moving more towards overseas and so we were slightly out of line,” he says.

At UBS the portfolio will be managed by Wilson Phillips in the global equities team and overseen by Mathew Stemp, CIO for the UK.

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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