FRANCE - The eur16bn French pensions reserve fund, FRR (Fonds de Réserve pour les Retraites) will select an overlay manager to advise on tactical asset allocation and currency exposure by the end of the month, officials said.
“It is true that 24% of our assets are non-euro denominated,” said Francis Mayer, the president of FRR’s executive board. “Therefore our consultants have advised us that we should cover this exposure. We will hedge our risks.”
The overlay manager would also be responsible for maintaining the fund’s overall asset balance and will use derivatives and other instruments to hedge out currency risks, but would not be given a separate mandate to trade currency as an asset class, Mayer said after a presentation of the FRR’s first annual report.
The FRR’s will tender mandates for socially responsible investments as well as private equity by the end of this year or the beginning of 2005. The mandate for private equity will be smaller than the mandates which have already been tendered, Mayer said. The smallest FRR mandates so far have been for eur240mn.
FRR officials also announced the firms selected to manage four mandates worth eur1.88bn, bringing to a close the search for managers for the initial eur16bn allocation. The fund selected Deutsche Asset Management to manage a four year, active US large cap value equity mandate worth eur460mn, with Robeco Institutional Asset Management as the standby.
AGF Asset Management will manage a four year, active US large cap growth equity mandate worth eur460mn. Goldman Sachs Asset Management was named standby.
AXA Investment Managers and Schroders Investment Management will manage a four year, eur240mn, active pan-European (ex-eurozone) equity mandate, with Investco named standby.
Capital International Limited and Morgan Stanley Investment Management were selected to run a four-year, eur240mn active Pacific area (ex-emerging countries) equity mandate, with Nomura Asset Management named standby.
The FRR’s pursuit of long-term active return is at odds with typical French pensions investment, as is the fund’s decision to invest 55% of total assets in equities and 45% in bonds. But the fund’s founding mission to generate returns ot meet future pension liabilities allows them to take a longer-term outlook and use active management to generate greater returns, said Raoul Briet, president of FRR’s oversight committee.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.