Newham Pension Fund ventures into active currency
UK - The £540m (€747m) London Borough of Newham Pension Fund is looking to appoint one or more managers for a new active currency portfolio.
The borough is looking for an active currency pooled fund to provide a return in the region of 20% per year above the London Interbank Offered Rate (LIBOR) starting from the beginning of February next year.
According to Newham, the total allocation to active currency is likely to be 5% of its defined benefit scheme's assets, currently equivalent to £27m.
Advised by consultancy firm Hewitt, the council will invite between five and 20 operators to participate, and candidates willing to be considered need to complete a pre-qualification questionnaire.
The contract will go to the most economically advantageous tender, the borough said. Time limit for receipt of tenders or requests to participate is November 15.
At the end of April, IPE reported that the fund had axed consultancy firm Hymans Robertson as actuarial services provider and appointed Mercer instead.
Elsewhere, the DKR38bn Danish Industriens Pensionsforsikring is also seeking external currency managers to target returns in active currency, as part of its wider plans to invest in new asset classes.
Planning to make a placement already early next year, the industrial workers fund said the move is part of a wider initiative to move into three to five newer asset classes.
In an interview with Global Pensions, the fund's head of equities said it is currently screening the market for one or two managers with a track record of good returns in active currency.
Industriens said that in the future it would probably also invest in other new asset classes such as hedge funds and infrastructure.
By starting off with the investment of a small amount, the fund wants to gauge if the asset classes are suitable, before increasing its allocation.
The move seems part of a trend away from the passive approach to currency among Danish funds: also the Danish funds ATP (DKR398.6bn) and PKA (DKR104.5bn) said they would possibly consider active currency for the future.