Northern scoops e1bn master custody brief
UK – The £640m (e1bn) Falkirk Council pension fund in Scotland has appointed Northern Trust as its master custodian, in a move which follows the recent appointment of Capital International to an approximately £128m UK/European equities brief.
Alastair Redpath, treasury manager at the fund, explains: “It was a twin track approach. We did require at the minimum a custodian for our new manager Capital International, who don’t have their own in-house custody services.
“ At the same time our best value review that we carried out recently had identified the possibility of going down the route of a master custodian, so we advertised for that also and we weighed up the benefits or otherwise of a single custodian for one manager or the master custody. The bottom line is that we came out with Northern as the winner.”
Redpath says that price was an element in the council’s decision, but adds: “We were comfortable with the relationship and the contact, as well as the strength of the company.
“ It’s such an important thing the security of the assets and we were very comfortable with the tender that they put in and the subsequent diligence that we carried out.
He says the fund received six tenders for the position.
Prior to the Northern hire, Falkirk ran its custody through its individual investment managers, but Redpath sees this trend waning.
“ The likes of Schroders have outsourced their own custody, so it’s becoming very mixed and I can see a move towards global custodians. It’s what Myners is alluding to.
Capital International will manage 20% of the funds assets, investing in a split between UK and European equities.
Schroders and Hendersons split the remaining 80% of the fund in multi-asset briefs, with all the managers measured against customised benchmarks.