UK - North Yorkshire County Council has agreed to appoint ING Real Estate as global property manager for its £1.07bn (€1.26bn) local government pension fund.

The council initiated a search for a global property manager for a portfolio valued at around £60m in May, signalling its first foray into real estate. (See earlier IPE article: North Yorks pension moves into property)

Documents published ahead of the council's pension fund committee meeting on 27 November 2008 revealed three managers - Aviva, CBRE and ING Real Estate - were short-listed for the contract and met with the selection panel on 7 November.

The report from North Yorkshire's treasurer noted "based on the evaluation of the documentation submitted and the responses to questions posed by the selection panel, it was agreed to appoint ING Real Estate".

It appears the exact details of the contract are still being finalised, including the rate and timing of cash drawdown required to fund the portfolio, as the report admitted "at this stage it is not possible to assess whether this can be satisfied from the annual cash flow surplus or will require a redistribution of funds currently held by other managers".

The appointment of ING follows North Yorkshire's decision to replace Barclays Global Investors (BGI) as manager of its overseas equity mandate, and award it to Fidelity. (See earlier IPE article: Hammersmith and North Yorks take opposing LDI positions)

The assets were originally scheduled to be passed from Mellon Asset Management, the council's transition manager, to Fidelity at the end of September, however the report pointed out this "coincided with severe market volatility around the world and after taking advice from the investment adviser the decision was made to postpone the transfer to Fidelity until more stable conditions prevailed".

As a result, the assets were finally transferred on 22 and 23 October 2008, with Fidelity scheduled to present its first findings to the pension fund panel in December.

Latest figures from the council showed the pension fund produced a total return of -10.9% in the third quarter, which was 5.5 percentage points below the target benchmark, while for the 12 months to the end of September the fund returned -20.9%.

The overall value of the fund fell by £121.9m in the quarter, with the biggest capital losses attributed to UK equities, with Standard Life dropping £37m; in overseas equities Baillie Gifford lost £33.9m and within fixed income ECM dropped £18m. 

Meanwhile, the latest investment report also noted that the Global Tactical Asset Allocation (GTAA) portfolio run by UBS " suffered another very difficult quarter as the particularly volatile equity markets across the globe continued to move against its positions", with the market fund MARS returning -26.2%, although the currency fund (CARS) yielded 43.6%.

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

Topics