UK - Railpen, the £15bn industry-wide pension scheme for the UK rail industry, has appointed three hedge fund managers to oversee its new £600m portfolio.
The three managers, all based in the US, are Blackstone Alternative Asset Management, Grosvenor Capital Management and The Rock Creek Group.
Railpen said each manager would invest one third of the portfolio, or £200m, through managed accounts, in which the fund managers select the underlying hedge funds but the investments are held directly in the name of the client. Each manager has selected about thirty hedge funds.
Chris Hitchen, chief executive of Railpen, said: “Our aim was to select a mix of investment styles and businesses and I believe we have achieved this with the three managers appointed.
“We were clear from the outset that the fund managers appointed would need to have both experience of and a willingness to work with large institutional clients, as well as the ability to construct low risk portfolios to meet particular client objectives.”
Hitchen, who is also chairman of the investment council at the National Association of Pension Funds (NAPF), said Blackstone and Grosvenor were well-established players in the market, and while Rock Creek was smaller, it was staffed with “vastly experienced investors who came out of the World Bank to set up their own shop”.
“The hedge fund universe is becoming ever more crowded, but Railpen is looking for safety-first, not stellar returns,” he said. “I am confident our managers can meet our objectives and I look forward to growing with them in the future.”
The Railways Pension Trustee Co (Railpen) provides pensions for some 350,000 current and former members of the railways industry.
The fund decided in 2004 to allocate up to 5% of its £15bn in assets in hedge funds with the vision to invest in a “highly diversified way at the lower end of the hedge fund risk spectrum”. The benchmark for the fund is LIBOR, with an aim of 4% per annum out performance net of fees over three years.
The manager search was conducted in-house, with advice in the initial stages provided by Watson Wyatt.
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