The final nail has been hammered into the coffin of the UK's £2.5bn Marconi pension scheme in-house fund management team with the appointment of Merrill Lynch Investment Managers to manage its £800m UK equity portfolio.
The Marconi pension scheme– which is called the GEC 1972 Plan and is a defined benefit scheme with over 43,000 active members– had been managing 70pc of its funds internally.
However the appointment of MLIM to manage the £800m UK equity portfolio and the appointment of Morley Fund Management to manage the £1bn bond portfolio in June means the pension scheme’s assets are all now managed externally.
Bond manager of the last four years Peter Jones is now out of a job and chief investment officer for the last 16 years Paul Phillips will follow him at the end of August.
MLIM took formal control of the £800m UK equity portfolio on Monday evening although the decision to appoint the fund manager was taken last month.
A source close to the pension scheme said there was ”immense sadness” at the loss of the in-house team as they had worked effectively as an internal operation for many years.
The source said: “The advantage of outsourcing fund management is that it puts the assets in the hands of an extremely well resourced and professional investment management organisation. However a small internal team is solely dedicated to the interests of the pension fund and is less subject to commercial pressures than external fund managers.”
The source added: “Over many years the team at the Marconi pension scheme has done a great job and returns in the long term have been better than most externally managed funds in the UK.”
MLIM was appointed to manage the £800m UK equity portfolio in light of its track record managing two other portfolios for the pension scheme.It has been managing Marconi’s £200m continental European equity portfolio since 1991 and its £250m UK specialist equity portfolio since 1983.
The pension scheme also has a £140m property portfolio managed by three fund managers– LaSalle Investment Management, Gerald Eve and Smith Melzack Pepper Angliss.
In addition it has a £100m Japanese equity portfolio which is managed by Jardine Fleming–a subsidiary of JP Morgan Fleming– in Tokyo and a £10m cash portfolio.
The source close to the pension scheme said: “MLIM has been appointed to manage the £800m UK equity portfolio because it has done a tremendous job managing the scheme’s other portfolios.”MLIM declined to comment.
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