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Waltham Forest drops ECM after strategy review

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  • Waltham Forest drops ECM after strategy review

UK - The £340m (€387m) London Borough of Waltham Forest pension fund is moving to an aggressive investment strategy which will see European Credit Management (ECM) terminated from a £41m brief.

ECM, which was running 12.5% of the Waltham Forest fund in an overseas fixed income mandate, will no longer form part of the pension fund's investment manager line up which will be restructured in a bid to capture more outperformance.

Following advice from recently-appointed consultants HSBC Actuaries & Consultants, the local authority pension scheme is moving to a 70/30 growth/bonds split that will incorporate alternative investments via a diversified growth fund.

The fund said: "Members received a detailed report from advisers HSBC together with a presentation both of which related to the current investment strategy for the pension fund assets. It was demonstrated that different investment splits could have achieved better returns in past financial situations with less inherent risk, and that adjustment to the overall strategy could reproduce that in the future."

ECM is the only manager to be terminated in the investment strategy restructure, although the remaining incumbent managers - AXA Framlington, BankInvest, DTZ and Nordea - may see alterations to their existing briefs.

Property manager UBS has already been asked to reverse an earlier decision to pull out of real estate and the manager will cancel a £2 redemption from its Triton fund. The pension scheme said withdrawal from property was no longer in its interests under the new investment strategy.

Waltham Forest is now preparing to tender for a replacement bonds manager alongside an alternative assets manager, with the latter expected to be appointed to run a diversified growth fund. The pension fund is yet to finalise precise detail of the new mandates. 

Waltham Forest's decision to rethink its investment strategy is in part motivated by disappointing performance in the last financial year; the authority's annual reports and accounts for the 2008 and 2009 reveals the fund haemorrhaged £105.5m in the last financial year.

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    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
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    Closing date: 2019-06-28.

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