UK - Staffordshire County Council has appointed Record Currency Management to run a specialist active currency overlay for its £1.69bn (€1.99bn) pension fund.
The council initiated the search for a currency manager in August 2007 to take on a portfolio valued at between £500m to £1bn, and it has now confirmed Record was chosen from five applicants to run the contract with an initial estimated value of £500m. (See earlier IPE article: Staffordshire tenders currency)
Record’s appointment follows a recent search by Staffordshire for investment manager to run one or more specialist portfolios in global equities, which will have a total asset size of around £600m. (See earlier IPE article: Norfolk and Staffs start manager searches)
The manager selection process follows an agreement by Staffordshire council’s pension fund committee in spring 2008 to a three-year strategic asset allocation approach, however in March the committee was told the changing economic conditions had led to a widening gap between assets and liabilities, but new initiatives “including a move to global mandates and the introduction of a currency hedging manager” were part of the “long-term” view of the pension fund.
Draft figures from the pension fund’s accounts for 2008-09 showed at 31 March 2009 the scheme had lost £501m to reduce the value of the scheme’s assets to £1.687bn compared with £2.2bn the year before.
The draft report also revealed the asset allocation of the pension fund at the end of March 2009 was 14% in fixed interest securities, 25% in equities, 2% in index-linked securities, 45% in pooled investment vehicles, 8% in property 1% in cash and 5% in other investments including hedge funds and private equity.