UK - Hampshire County Council is looking to almost double its pension fund's exposure to UK commercial property over the next year to meet the 8% target allocation agreed before the market downturn.

The council's £2.7bn (€3.1bn) pension fund is also "growing into" the planned increase in its alternatives allocation to £250m, or 10% of the fund, after new investments were put on hold following a 20% fall in the fund's value in 2008.

Hampshire told IPE its earlier plan to expand into UK commercial property, agreed in 2007, will move forward over the next 12 months as it seeks to increase its exposure from 4.3% to 8% of the fund.

Falls in the property market since July 2007 meant the scheme has been "holding fire until the market is as low as it gets", and now it appears to be getting near to this point the scheme has been advised it would be "timely to jump into that market over the next year".

However the council pointed out any investment decisions, particularly in terms of timing, would be at the discretion of the property managers, with the scheme currently employing CB Richard Ellis for UK direct/indirect property and Aberdeen Property Investors for European direct/indirect property.  (See earlier IPE article: Hampshire appoints seven new managers, looks into hedge funds)

Meanwhile Hampshire confirmed the value of investments in alternatives, which is primarily made up of private equity, was 4.7% at the end of March 2009, but added the nature of private equity investment means it takes a while to reach the target allocation of 10%.

The increased alternatives commitment was agreed in 2007, with Bramdean appointed as the pension fund's specialist manager, but any new investments were temporarily frozen as the fall in fund value over the last year meant the investments in the alternatives portfolio neared the 10% target. (See earlier IPE article: Hampshire stays with Bramdean alternatives)

However it pointed out that "as the fund recovers in value we may look at other alternative investments", and added the current allocation of £250m could increase in line with the overall fund value to ensure the 10% allocation is maintained.

Figures show the pension fund has already improved from £2.4bn at the end of March 2009 to £2.7bn three months later, and it is expected the scheme will be "pretty much fully invested up to 10%" over the next 18 months.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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