UK - Oxfordshire County Council pension fund is to review its Tactical Asset Allocation(TAA) strategy, managed by UBS, and has asked the fund manager about the possibility of returning £575,000 (€720,820) in performance fees after performance "deteriorated".
The £1.08bn local government pension scheme voted in the December meeting of the pension committee to formally review the performance of the UBS fund by the end of August 2008.
In the pension fund's business plan for 2008/09, Oxford admitted committee members had been disappointed with the performance of the TAA, which is demonstrated in figures from the fund's total portfolio progress report for the period October 1 2007 and December 31 2007, as the value of the TAA fell from £31.5m to £30.6m.
As a result, the business plan revealed pension fund officers and the scheme's independent financial adviser are currently in discussions with UBS to agree a more "challenging" benchmark by August 31 2008.
In addition, it noted the scheme intends to ask UBS to "respond formally" about whether they are willing to return £575,000 in performance fees paid during the first few months of operating the TAA fund, as since this point the performance "has deteriorated".
However, the minutes of the December pension committee meeting show in response to a question a representative for UBS stated "a rebate on past fees for the TAA was unlikely but they were considering the revision of fees for the future".
IPE learnt of Oxford's decision to review its TAA strategy through examination of the latest committee meeting documents, after the pension fund issued a tender searching for a specialist passive UK equity manager.
The mandate follows a decision by the pension fund to transfer a UK equity portfolio - also managed by UBS - to a passively-managed index tracker as a review of investment performance revealed the portfolio had underperformed the benchmark over a three-month, six-month and three-year period.
In addition, members of the pensions committee agreed at the same meeting to transfer the fixed interest portfolio - again managed by UBS - to Legal & General, while a disappointing performance from the UK equity portfolio managed by Baillie Gifford led the committee to schedule a further performance review of the manager by August 31 2008.
The specialist passive mandate being tendered by Oxford is initially for £100m - the approximate value of the UBS managed portfolio - although it admitted the "mandate may be broadened at some future point".
The tender is for a 10-year contract and requires potential applicants to have a minimum of £5bn pooled passive UK equities under management, and have responsibility for more than £30bn passive equities.
Oxford has recently been searching for a global custodian following the expiry of BNY Mellon's existing contract on March 31 2008, however the tender closed on January 25, and the pension fund's latest business plan reveals it expects the successful applicant will be in place by May 1 2008. (See earlier IPE story: Oxford takes a look at custody)
Elsewhere, the £2.5bn Nottinghamshire County Council pension fund is seeking a provider of actuarial services for a minimum three-year contract.
The responsibilities of the successful applicant will include:
The tender states the contract, which is currently held by Mercer, is expected to begin on September 1 2008 for a minimum of three years, and carries an option to extend it for a further six years if required.
Deadline for applications for the specialist passive UK equity manager will close on May 27 2008, while the deadline for submissions for actuarial services for Nottingham will close on May 19 2008.
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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