London fund overhauls equities managers
The London Borough of Harrow, a local-government authority in London, has hired three new fund managers to run portions of its £340m (€378m) pension fund following a review of its investments that has led to UBS Global Asset Management and Baillie Gifford being dropped.
The Harrow fund is over 70% invested in shares, an unusually high proportion, and has suffered in the financial crisis - at its last full valuation on March 31 2008 it was worth £410m. However, it has also been hurt by the relative underperformance of its fund managers, according to documents published at its website this week.
The fund's governing investment panel wrote: "The overall results of the fund, when compared to other local authority funds, has been eroded by the overweight position in equities and the negative experienced from currency hedging in the recent period. This was further impacted by the poor performance of managers in a number of areas."
As a result it instigated a review of its equities portfolio - previously handled by Scottish asset manager Baillie Gifford, and the Swiss-owned group UBS Global Asset Management. The first company was permitted to re-tender for the business, but UBS was not. Baillie Gifford and UBS Global Asset Management could not be reached for comment.
Jennifer Hydari, divisional director of finance and procurement, said: "The trustees wanted to make sure they were getting what they paid for, in terms of performance."
Following the review, the fund's trustees have picked four new equities managers. State Street Global Advisors will handle about £90m in passively-managed UK equities, while US firm Wellington Management and UK-based Fidelity International were picked to run about £70m and £60m respectively in global equities.
Longview Partners, a boutique founded by two ex-Goldman Sachs investment managers, Keith McDermott and Ramzi Rishani, won about £25m for its global equity process.
As well as changing its equities managers, the Harrow scheme is also reducing its overall equities allocation slowly, shifting small amounts of money to its alternatives portfolio.
The £539m London Borough of Camden also announced this week that it had overhauled its portfolio at the beginning of the year. It split a £400m mandate between Aberdeen Asset Management and Fidelity International and appointed Goldman Sachs Asset Management to a £80m fixed income contract.
Legal and General Investment Management was also awarded £190m to manage through a passive equity and bond portfolio.
--write to mcobley@efinancialnews.com
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