UK - UBS Global Asset Management has suffered dismissals by two UK local authority pension schemes.

The £417m (€480.6m) London Borough of Croydon pension scheme has sacked UBS from bond and equity briefs as part of its move to a more diversified investment strategy, while the £762m Somerset county council fund has terminated the fund manager from a Japanese equity mandate following underperformance.

Croydon’s decision sees UBS lose control of an 88% allocation after the local authority chose to ditch its passive index-tracking strategy in favour of an active, diversified portfolio.

UBS has since been replaced by five global equity managers - Fidelity, DB Advisers, Edinburgh Partners, Franklin Templeton and Saracen - who share 50% of the fund. Croydon’s 30% bond allocation has been split equally between Standard Life and Wellington.

The rest of the portfolio is given over to alternative assets including a 4% allocation to fund of hedge funds divided between two managers; a 4% global tactical asset allocation mandate run by Nordea; an intended 7% property commitment to Henderson Global Investors; and a 4% private equity investment split between long-term incumbent Pantheon and newly appointed Equiteq and Knightsbridge.

UBS’ termination by the Somerset scheme was motivated by concerns over poor performance. The fund manager had been responsible for a £15.8m Far East equity portfolio which ran alongside Somerset’s own in-house Japanese equities fund.

Anton Sweet, funds and investments manager for the Somerset pension fund, told IPE: “[We replaced UBS] because their performance on Japanese equities was not of the desired standard.”

According to the BNY Mellon Asset Servicing CAPS’ rolling five-year figures for pooled Japanese equity funds, the UBS Global Asset Management Japan OEIC returned 0.8% for 2001 to 2005 ranking it 32 out of 35 funds. The rolling three-year returns for 2003-2005 saw UBS deliver 17.1% placing it 38 out of 39 funds. Annual returns after 2005 were not given.

Somerset has selected a replacement manager but is yet to finalise contracts.

The West Country scheme sought no external investment advice for the termination of UBS and subsequent tendering process, while Mercer oversaw the restructuring of Croydon’s investment strategy.

 

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