UK - Westminster City Council is considering the development of framework agreements to allow mandate changes to be speeded up, following concerns over manager performance.
Information from Westminster Council showed the pension fund has five external managers, with Majedie Asset Management and State Street Global Advisers running UK equity mandates, Alliance Bernstein and Newton Investment Management are responsible for global equities mandates and Insight Investment Management runs the bond portfolio.
However, documents from the latest meeting of the pension fund committee in March revealed members had previously "expressed concerns relating to a number of the current investment managers".
The council's director of finance submitted a report on the options available in relation to the structure and contracting arrangements for the pension fund, and recommended that a "framework option" would provide the Committee "with the tools to effect mandate changes more quickly".
The report noted, however, that adopting this process would require "clear governance procedures" to ensure the pension fund does not incur high fees or charges when making manager changes.
In the meantime, the finance director has suggested should the committee decide to terminate one of the investment mandates in the immediate future they could appoint an interim manager to take over until a full tender process has been completed.
Looking ahead, the report noted "one of the critical weaknesses of our existing manager structure is the inflexibility of it", and acknowledged this had already caused the committee some concerns.
Members were told it is possible to have an arrangement where it can "change the holders of mandates quickly without the difficulties", but it would have to procure a framework agreement, which deals with at least three suppliers and can be for one or more types of investment mandate with a competition between suppliers for the right to run the specific mandate.
As a result of the ongoing concerns, the director of finance recommended the committee approve the use of framework agreements, and authorise the procurement of these for investment management services for a UK equity mandate, a global equity mandate and a bond and fixed income mandate.
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