Strathclyde in E1.52bn bond, equity tender
UK – The five billion pound Strathclyde pension fund has put out two tenders of up to 1.05 billion pounds (1.52 billion euros) following an asset liability study.
Glasgow City Council is tendering a bond portfolio and an equity portfolio for the Strathclyde pension scheme.
The bond portfolio will have an initial value of 250 million pounds. The benchmark will be predominantly sterling bonds with a significant allocation to investment grade corporate bonds. A small allocation to high yield and emerging market debt is also being considered as part of the mandate.
The equity portfolio will have an initial value of between 300 million pounds and 800 million pounds. The structure of the portfolio – how many contracts, which assets classes – is yet to be decided.
The move comes as the scheme takes a further step towards specialisation. Richard McIndoe, chief pensions officer at the scheme, says that the scheme wants to move away from multi-asset funds. Presently Schroders Investment Managers and JP Morgan Fleming Asset Management run two multi-asset funds. These are being split into the new separate bond and equity mandates, although the two managers will be expected to re-tender.
Following the asset liability study, the fund is also deciding whether to:
- reduce its target equity exposure from 81% to around 75% (the approximate current actual exposure)
- increase exposure to corporate bonds and property
- increase the overseas component of the equity mix to 45% of total
- slightly increase the active risk characteristics of the investment management structure
Major changes to the investment strategy were not felt to offer sufficient rewards in relation to costs.
The deadline for applications for the two mandates is May 18. Other managers for the fund include Legal and General, Baillie Gifford, Aberdeen Property Investors, Capital International, Henderson, Gartmore, Genesis and Pantheon.