UK - An asset liability study penned in for next year at the £1.26bn Aberdeen City Council could see a reduction in its equity holdings, the globalisation of a private equity folder and the introduction of a new hedge fund portfolio.
A source close to the fund also hinted that there were some concerns surrounding the performance of Schroder Investment Management which holds a £255m balanced mandate for Aberdeen.
As reported exclusively in IPN last week, Hymans Robertson is currently conducting an actuarial valuation for the Aberdeen with the intention of carrying out an ALS by year end.
The source said that it is likely that the study could see a downsizing of Aberdeen’s considerable equity allocation. Currently, the fund holds 51% in UK equities, with overseas equities amounting to around 21% of total assets. Capital International, Deutsche Asset Management, Friends Ivory & Sime, Merrill Lynch Investment Managers, Schroder Investment Management and State Street Global Advisors all hold an equity component as part of their mandates.
The source also added that although performance reviews were not on the immediate agenda, Schroders “do not perform as well as Deutsche who have exactly the same mandate.” Deutsche handles a £310m balanced brief.
The fund’s manager roster also comprises Aberdeen Asset Management which handles the fund’s 2% venture capital allocation. The source revealed that the current portfolio, which is UK-focused and is held as half segregated and half pooled private equity, may become fully segregated with a European or even global outlook.
The fund might also be looking to top up its alternative investments. The source stated that hedge funds would form part of the review, with Aberdeen looking to go down the fund-of-funds route.
Aberdeen’s overall asset allocation is UK equities (51%); overseas equities (21%); UK bonds (6%); overseas bonds (4%); index-linked bonds (3.5%); venture capital (2%); cash (8%), and property (4.5%).
By Madhu Kalia
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