UK - Barclays Global Investors (BGI) has been awarded a commodities mandate worth around £25m by the Ernst & Young Retirement Benefit Plan, which is in the final stage of its investment strategy shake up.
The move came from a decision made in summer 2006 to diversify the £600m fund’s portfolio from its 80% equities/20% bond holding.
Tim Carney, pensions manager, Ernst & Young, clarified: “This new mandate is not a result of a manager performing particularly badly, but more from trustees opening up to a more diversified asset allocation.”
The 4% of assets moved into commodities was taken from the fund’s global equities portfolio jointly managed by Capital and Newton.
Carney said: “Trustees realised that short term volatility could be of benefit in the long term in terms of diversification and this new structure rewards increased globalisation in the market.”
He added: “Also when we looked to invest in commodities, it seemed like good timing with some good vehicles available in the market.”
A 10% hedge fund allocation was taken by Financial Risk Management (FRM) and Hermes took a 4% real estate mandate.
The fund now holds 40% in global equities, including 4% in emerging markets, two 20% stakes in UK equities and bonds.
Mercer advised the fund on its strategy restructure and BGI carried out the commodity mandate transition.
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