UK - Essex County Council is putting nearly half its £2bn pension fund up for tender, following an asset liability modelling conducted by consultant Watson Wyatt.
The scheme has put eight mandates - worth a total of £945m - out to tender. The biggest mandates up for grabs are a £620m passive multi-asset (ex real estate) portfolio and a £140m UK active bonds brief.
The remaining six mandates up for tender are as follows: three £35m UK equities portfolios, a £40m Japanese equities mandate, a £20m Pacific ex-Japan equities brief, and a £20m emerging markets equities portfolio.
The fund has very specific criteria for the six mandates, according to John Wigley, the fund’s consultant from Watson Wyatt. The six mandates will consist of concentrated portfolios and winning managers will be set high performance targets, targets that will be determined at a later date. The deadline for submissions of interest is May 21.
The biggest surprise is that Legal & General Investment Management has lost its recently won £250m index-tracking UK equities brief. Wiggley said that following the ALM, the fund has decided to incorporate L&G’s mandate into the £620m passive portfolio. Wigley did offer a note of encouragement for the firm, stating that he believes it is in contention for the larger passive mandate.
Wigley declined to reveal any further details, other than the fact that Capital International and Henderson Global Investors - who were appointed alongside L&G by the fund last May in place of Schroders - will retain their mandates. Capital will continue to run a £150m equities brief (ex-UK), whilst Henderson has retained its £100m global equities brief.
Essex’s remaining managers are Baillie Gifford, Baring Asset Management, Hermes Pensions Management and Merrill Lynch Investment Managers. Hermes runs a small amount for the scheme in a Hermes Focus fund.
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