UK – The £3.2bn (€4.7bn) industry-wide Merchant Navy Officers Pension Fund, which is currently in the middle of its triennial valuation, is looking to gradually shift from equities to bonds.

“We are planning a gentle, non-forced migration from equities to bonds over a period of years,” MNOPF co-head and investment director Alick Stevenson said at a pensions strategies conference in London.

The scheme is planning to reduce its risk budget. “We are going to do what we want …rather than be driven by any outside influences,” he added.

The MNOPF currently has 56% allocated to equities and 44% invested in bonds.

Stevenson told IPE on the sidelines of the conference that it was too soon to predict how the asset allocation would change, how many managers would be selected or axed, and how many mandates would be created,

“You are about six months too early,” he said.

The scheme is 95% outsourced. It has 15 investment managers, 16 mandates and one global custodian.

The MNOPF’s move towards liability driven investing first took place towards the end of 2000 when it sold its gilts and bought the equivalent Supranationals on a ‘buy and hold’ core portfolio basis.

Since then, it collapsed its regional equity mandates and funded global equity mandates, dipped into alternatives and approved a transition of assets from relative return space into absolute return, liability driven and unconstrained mandates, amongst others.

Watson Wyatt is conducting the scheme valuation, and will also advise the trustees on the shift from equities to bonds.

The trustees will be presented with the triennial valuation in November. Recommendations and decisions on future investment strategy will be based on these numbers, according to Stevenson.

The MNOPF is headquartered in Leatherhead, Surrey, and has 55,000 beneficiaries.

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