UK - The London Borough of Harrow is seeking a passive UK equity manager and two global equity managers for its £440m (€564m) pension fund.
Tender notices issued by the council revealed it intends to allocate around £110m to a specialist UK passive manager, while a further £190m will be invested with two active global equity managers.
The exact split of the new global equity portfolio - equivalent to 25% of the fund's assets - has not been confirmed but is likely to be 50:50, while the target for the two managers will be to outperform the MSCI All-Countries benchmark by 2-3% per year over rolling three- to five-year periods.
Minutes from Harrow Council's last pension fund investment panel in September revealed it had been reviewing proposals on the fund management structure of the scheme, with the favoured proposal by the scheme adviser, Hymans Robertson, involving "a re-tender of existing mandates as there were concerns about current performance and the ability to deliver for the future".
The scheme's adviser put forward proposals aimed at improving the return on investments while retaining current levels of risks, and included outlines of "the options available and the rationale for active/passive management of funds, the merits of increasing diversification and the number of fund managers that could be employed".
Minutes of the meeting showed committee members agreed the tender processes for a passive manager and "at least two global equity managers" should be initiated as a resutl of the guidance given, while proposals for changes to the bond and property mandates will be discussed at a future meeting.
The pension fund currently employs six investment managers - BlackRock, UBS, Baillie Gifford, Record Currency, Pantheon and Mellon - and the largest chunk of the investments - 45% - had been managed by UBS while Baillie Gifford managed 39% to the end of March 2008.
However, a spokeswoman for the fund revealed the tenders are for new mandates rather than existing ones, as the fund is "making changes to the way it manages the pension fund" as, given the current market situation, it is "not uncommon to look to passive in the UK" if there are concerns over the effectiveness of active management.
She revealed the pension fund would remain 71% invested in equities, however within this the pension fund intends to reduce the allocation to UK equities, switch to passive and instead "put a bit more into global" equities.
The closing date for applications for the UK passive tender is 1 December 2008, while the deadline for submissions for the global equity positions is 17 November 2008, any further information can be obtained from the manager research team at Hymans Robertson.
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