EUROPE – The pension fund for the UK’s Leicestershire County Council has appointed hedge fund manager Aspect Capital to run an £80m (€99m) managed futures portfolio.

The pension fund has narrowed the investment managers down to three through a detailed search exercise, it said.

The mandate – which represents 3.5% of the pension fund’s total assets and should be fully funded within six months – is not the local authority fund’s first venture into hedge funds.

Much of the funding for the mandate is already available from the redemption of hedge funds formerly held within the Fauchier Partners portfolio, and almost £60m was expected to be invested in the strategy in the middle of November, according to minutes from a recent pension committee meeting.

“The residual £20m will be sourced […] via cash flows and the remaining redemptions from the Fauchier portfolio, where about £15m of assets are still held,” the minutes said.

According to its financial statements, at the end of September this year, the pension fund held £48.9m of cash pending investment in managed futures portfolios.

The pension fund already holds hedge fund investments with Aviva Investors, which for the three months to September underperformed the benchmark by 1 percentage point.

The £2.4bn fund currently allocates more than half of its assets to UK and overseas equity.

A further 22.4% is invested in a targeted return and credit strategy, with 11% in real estate, 6.6% in inflation-linked assets – largely UK Gilts after a re-allocation of holdings in US Treasury notes – and more than 3% in commodities.

The fund also invests 4.5% of its holdings in private equity.

Meanwhile, Macquarie Group has been awarded a mandate to establish and manage an infrastructure debt portfolio for global reinsurance and insurance provider Swiss Re.

The $500m (€385m) mandate is the first to be secured by the new Macquarie Infrastructure Debt Investment Solutions (MIDIS) business.
 
MIDIS will deliver infrastructure debt investment opportunities to long-term institutional investors.

The portfolio will be invested in senior secured debt of infrastructure businesses and assets located predominantly in Northern Europe.

In other news, Royal London Asset Management (RLAM) has cleared its first derivatives trades at LCH.Clearnet as part of its preparations to meet its obligations under the proposed European Market Infrastructure Regulation (EMIR), due to be introduced in 2013. 

The asset management firm has cleared £550m of vanilla interest rate swaps through LCH.

RLAM said it had been preparing for the implementation of EMIR since the start of 2012 and was now completing testing on its external client clearing offering.

The firm expects to be in a position to offer this capability to its external clients in Q1 next year.

EMIR will require all standardised OTC derivative contracts – such as interest rate swaps and credit default swaps (CDS) – to be cleared through central counterparties (CCPs) in a bid to reduce market and counterparty risks and increase transparency.

Lastly, Mercer has won contracts to provide more than 50 clients, including UK Greetings, with its Mercer Workplace Savings (MWS) offering.

In a statement, Mercer said the wins – which bring assets under management to £2.2bn – reflected clients’ increasing focus on pension scheme governance in light of auto-enrolment.