UK - Active managers' higher fees for relatively low returns have led the London Borough of Richmond upon Thames pension fund to shift 50% of its portfolio to passive management.
Malcolm Smith, senior accountant at the fund, told Global Pensions: "This move was not primarily down to any dissatisfaction with particular managers, more a positive election in favour of the relative simplicity and efficiency of passive management as a long-term approach."
Smith explained the fund had examined fees paid to active managers and found they often wiped out any above-index returns in what is effectively a 'zero sum game'.
He continued: "To continue with active managers in the long-term, we would have to either be very optimistic about the returns managers could produce, or have a superior knowledge of which company to select.
"We didn't feel we necessarily fitted in either category," concluded Smith.
Maintenance issues were also cited as an important factor in the fund's decision to move to passive management as this type of investment required less monitoring.
Elsewhere, the £1.1bn (US$2.1bn) Northampton County Council Pension fund has awarded an overseas equity mandate to Newton Investment Management following a portfolio shake up.
Northampton received 50 tenders for the contract and a spokesman said the fund was 'very pleased' with Newton's appointment.
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