The Corporation of London Pension Fund is tendering six mandates of up to £130m each in bonds, equities and cash, following a major revision of its investment strategy.
The Corporation said it was switching from its current investment policy of trying to outperform market index benchmarks to an “absolute return” strategy to better match its liabilities.
The fund, a defined benefit scheme, was 87.3% funded at the last valuation in 31 March 2001, with past service liabilities of £421m against a fund market value of £368m.
Currently six managers – five active and one passive – manage assets totalling £236m at 31 March 2003. The five active managers are Gartmore Investment Management, Baring Asset Management (BAM), Wellington Management Company, Fidelity Pensions Management and Artemis investment Management. The pasive mananger is State Street Global Advisors, which manages a UK tracker.
The pension fund currently uses a core-satellite approach to investment. Gartmore manages half the total assets in a low risk portfolio benchmarked against the WM All Pension Funds index.
The rest of the assets are split between specialist mandates. BAM manages Specialist Europe (including UK), Wellington manages Specialist North America, Fidelity manages Far East including Emerging Markets and manages a UK Specialist Equity Mandate
The benchmarks are based on the current strategic asset allocation which is 88% equities and 12% bonds and cash.
Contracts with the six managers expire in the middle of next year. Gartmore has said it that intends to re-tender when its contract ends.
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