Henderson and Aberdeen, who each managed 50% of the £636m Westminster City Council pension fund, have both lost balanced mandates worth approximately £318m.
However, the pension fund has said that at the time the decision to review the managers was taken, Aberdeen’s brief was managed by the Deutsche Asset Management team. Aberdeen completed its acquisition of the UK arm of DeAM in September 2005.
Performance issues and a desire to restructure in favour of specialist management were cited as reasons behind the move.
The two managers’ mandates focused on domestic and global equities, including US, Japan, Pacific and Europe; and also fixed interest securities.
Global Pensions reported that the managers stood to lose the briefs back in January, when treasury manager Helen Strand said the fund was revising its management structure to have two managers investing solely in UK equities, another two managers in global equities, and one further manager concentrating on the fixed interest portfolio.
Now the pension fund has appointed five new managers, and Lehman Brothers International as transition manager.
In line with Strand’s restructure outline, Alliance Bernstein and Newton Investment Management won the global equities mandates, State Street Global Advisors and Majedie Asset Management won the UK equities mandates, and Insight Investment Management won the bond brief.
The pension fund’s finance manager Ian Woodall said public sector pension funds were just catching up with private sector funds with respect to moving from balanced to specialist strategies.
“It has taken the public sector a while to catch up with the fact that balanced is very difficult. It’s monolithically slow to react whereas if you have a specialist that’s all they are charged with. It’s a reflection of a more prudent style and that certainly drove our strategy to change,” he said.
“It’s very difficult for a balanced fund manager to have ten toes in ten different ponds. If you look at the change to the way investment managers marketed this as it currently stands to the way it was ten years ago, you have far greater numbers of boutique houses which are specifically designed to deliver a good performance or out performance.”
A spokesperson for Henderson declined to comment on the mandate loss, but said: “We’ve made a number of changes to the investment team in the last year, restructuring the fixed income division and making some key hires such as Graham Kitchen as head of UK equities, Gareth Quantrill as head of credit and Jim Irvine as head of structured products.”
Aberdeen stressed that DeAM managed the brief at the time the decision to re-tender was taken.
By Lisa Haines
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