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UK’s BoS restructures e1.73bn pension fund

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UK – Edinburgh Fund Managers and Baring Asset Management have lost their mandates for the Bank of Scotland’s 1.2 billion pound (1.73 billion euro) pension scheme as a result of a complete restructuring of the fund.

The Bank of Scotland 1976 Pension Scheme was previously split into two parts – 40% was managed on a passive basis by Legal & General Investment Management, and 60% was managed on an active basis by EFM, Baring AM and UBS AM – with EFM managing 70% of the 60% portion.

Following a review of the investment structure, the scheme has now moved away from an active pooled style, organising its active investments into separate asset classes of UK equities, global equities, bonds and property. Legal & General has been retained to manage 40% of the whole fund on a passive basis.

Baillie Gifford has now been appointed to manage 35% of the active element of the fund, which is to be invested in UK equities.

Insight Investment has been appointed to run a 144 million pound (207.5 million euro) bond mandate accounting for 20% of the 60% of the fund managed actively. Essentially Insight takes over from Barings, which managed fixed income investments for the Bank of Scotland scheme. The new mandate is to be run against a 50/50 UK gilt/corporate bonds benchmark.

UBS Asset Management has been retained and seen its portfolio increased. It will manage the scheme’s global equities portfolio – 35% of the 60% invested on an active basis.

Knight Frank will manage the fund’s property portfolio accounting for 6% of the total assets.

Northern Trust has been appointed as global custodian.

Bob Reid, chairman of the trustees, said the reshaping would being “greater diversification to the Fund’s investment structure.” The reorganisation should be completed by the end of the year.

All appointments were made following a competitive pitch.

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