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Shropshire awards bond mandate to boutique

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  • Shropshire awards bond mandate to boutique

UK - Shropshire County Council has awarded a new global bonds mandate for its £820m (€944.5m) pension fund to US boutique firm Strategic Fixed Income.

The council initiated a search for a manager to run a second global bond mandate alongside a 10% allocation run by Pimco, after a review of its bond investments at the end of 2008 resulted in the decision to reallocate a UK aggregate bonds mandate run by Aberdeen AM to global bonds where there are "more opportunities". (See earlier IPE article: Shropshire to add second global bond portfolio)

Shropshire confirmed the £41m global government bonds mandate, equivalent to around 5% of the pension fund's assets, had been awarded to Strategic Fixed Income, following a total of nine tender submissions.

A spokesman for the council said the US-based boutique organisation was felt to have the "experience and capability to run the mandate, and we felt it would add to our existing suite of managers".

The new mandate, which is benchmarked against the Citigroup World Government Bond Index (Sterling Hedged) with a target of +1% a year over a three-year rolling period, will sit alongside a global aggregate bonds portfolio run by Pimco Europe and a 10% allocation to UK Index-linked bonds managed by Legal & General, which will make up the pension fund's 25% allocation to fixed income.

Shropshire has meanwhile revealed it is still looking at the tender submissions for a new 10% allocation to global equities, which was announced in May, while a 3% allocation to infrastructure is expected to be put out to tender later in the year. (See earlier IPE article: Shropshire reduces UK equities for new global mandate)

The new global equity and infrastructure investments will be funded from a reduction in UK equities, with the 10.5% allocation run by Goldman Sachs Asset Management reallocated and the 12.5% portfolio managed by Majedie Asset Management will be reduced to 10%.

However, Shropshire said it is still conducting research into the potential infrastructure investments so the search for a relevant manager will not begin until after the global equity search has been completed.

Elsewhere, the University of Bristol Pension and Assurance Scheme (UBPAS) is seeking managers to run 90% of the scheme's investments through two portfolios.

The university is offering 75% of its assets, around £85m, to an investment manager able to run a portfolio of passive UK and overseas equities, passive index-linked gilts and active corporate bonds.

It intends to split the investments within the mandate to place the majority, £34m, in overseas equities, while three lots of £17m will be invested in the remaining asset classes through the use of pooled fund vehicles.

The second tender is for a £17m mandate, equivalent to 15% of the fund, relating to the management of a pooled diversified growth fund, with an expected target return/benchmark of cash or inflation plus 3-5% over the long term.

Tender submissions to both lots should be received by 30 September 2009 and further information can be obtained from the procurement department at the University of Bristol.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

 

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