Torfaen to move into global equities
UK - Torfaen County Borough Council is searching for one or more managers to run a new global equity portfolio valued at around £100m.
The council, which administers the Greater Gwent (Torfaen) Pension Fund, currently has a benchmark allocation of 46% in UK equities, 31% in overseas equities, 14% fixed interest, 5% in other assets and 4% in cash.
A spokesman told IPE the fund is fairly heavily into equities and "perhaps has a higher portion in the UK rather than overseas" so it seems an "opportune moment" to tender a brand new mandate for global equities that should bring the fund in line with other schemes and mean it will be better positioned.
He confirmed the pension fund is maintaining its existing overseas mandates, although the new global portfolio would be funded from the recent termination of an active UK equity mandate run by State Street Global Advisers (SSGA).
Torfaen council revealed the assets from this UK portfolio would be moved across to the new managers, while it also confirmed the Japanese equity portfolio run by Barings had also been terminated, with the assets transferred to its transition manager to be temporarily managed on a passive basis.
The £100m (€116m) mandate, equivalent to around 9% of the fund, could be split between one or more managers in pooled or segregated accounts with a target of a minimum return of MSCI World (or FTSE World) + 2-4 % net of fees.
Torfaen said only active long-only managers will be considered for the role, preferably with a minimum two-year track record, as fund of hedge funds, 130/30, or long short funds will be excluded.
Figures from the pension fund's annual accounts for 2008-09, showed that at the end of March the value of the scheme had dropped from £1.1bn in December 2008 to £1.04bn at the end of the first quarter following an investment return of -7.9%.
However, documents presented at the latest committee meeting at the end of June showed the recovery in the stock markets since March has increased the value of the scheme by around £100m to reach an estimated £1.15bn at 31 May 2009.
The contract for the specialist global equity portfolio is scheduled to begin on 1 February 2010, and the deadline for applications is 17 August 2008 with further details available from bfinance.
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