UK – The BBC says its £6.4bn (€9.4bn) pension scheme has dropped Deutsche Asset Management in favour of NewSmith due to an underperformance on investment targets.
The broadcaster told IPE that a substantial portion of DeAM’s equities portfolio was handed over to NewSmith, although exact figures were not disclosed.
NewSmith Asset Management today confirmed the win but declined to comment further, citing client confidentiality.
DeAM’s failure to meet its benchmarks led to its dismissal, said a spokesperson for the BBC. It had run assets for the BBC Pension Trust Ltd for three years.
The loss is the latest of a series of asset outflows and staff departures at DeAM in the UK, most of which was bought by Aberdeen Asset Management earlier this year.
The fund has risen by £500m over the past year, but its total return was 0.8% lower than its expected 11.6% benchmark. This led to the trustees’ decision to cancel DeAM’s mandate.
“The fact that the scheme has marginally underperformed against its investment benchmarks is of concern to the trustees. We are looking to address this issue,” trustee chairman Jeremy Peat was quoted as saying in a BBC staff bulletin in a newspaper article today.
The scheme has also appointed NewSmith to manage a small hedge fund.
“Hedge funds are a lower risk investment. It’s an absolute return benchmark, but its very early days. We’ll just have to wait and see,” said the BBC spokesperson.
The BBC’s fund has a total of 21 000 active members, and currently pays out to 20 000 retirees. According to the article, approximately one third of the fund is invested in bonds, while the remainder has been ploughed into stocks and equities.