UK – The roughly £1.3bn (€1.9bn) Xerox UK Final Salary Pension Scheme has awarded a £260m “cutting edge” liability-driven mandate to fixed income fund management firm, PIMCO.
According to a spokesperson for the scheme, PIMCO did not replace an existing fund manager.
“Strategy has been developed,” he said.
Paul Craven, PIMCO’s UK institutional business development head, stated this mandate is “at the cutting edge of the industry’s move towards liability driven investment” LDI.
The mandate is benchmarked against a combination of swaps and index-linked bonds that better match the risk characteristics of the scheme’s liabilities compared to simple market capitalisation weighted indices, according to a statement released today.
PIMCO is “thrilled” to manage this active bond portfolio, said Craven.
“This trend towards bespoke, scheme-specific benchmarks reflects a small but growing number of UK pension funds.”
According to a PIMCO spokesperson, weak equity markets between 2000 and 2003, a changing regulatory environment and the increased role of the corporate sponsor are among the factors leading to an increased interest in scheme-specific benchmarks for UK pension funds.
The competitive tendering process was launched and completed in 2005. Mercer Investment Consulting advised the scheme.
PIMCO oversees more than £345bn worldwide, with £26bn managed or serviced out of London.