London Regional Transport adopted a core-satellite approach for its...

London Regional Transport adopted a core-satellite approach for its £3.5 billion ($5.6 billion) pension fund, adding four new managers and appointing a single custodian. The fund formerly was managed in global balanced portfolios by Baring, 38%; Schroder, 38%; and Gartmore, 20%. LaSalle Investment Advisors continues to manage 4% of the fund in a real estate mandate, although that exposure will be reduced over time. Under the restructuring, Barclays will manage 28% of the fund, or £980 million, in a global balanced index portfolio. Societe Generale Asset Management UK and Baring each will run £560 million in U.K. equities, and Gartmore will run £350 million in European (including U.K.) equities. Schroder and J.P. Morgan each will run £175 million Far East and U.S. equity portfolios, respectively. Henderson Investors will run £700 million in U.K. gilts and U.K. index-linked bonds. The fund named Chase Manhattan Bank as sole custodian to improve control of the funds and reduce administrative costs. Previously, each manager had its own custodian. The restructuring follows a nearly two-year assessment of asset allocation strategies after a 1997 actuarial valuation showed a major shift in the fund’s liability profile with more than half the members retired, said Chris Bedford, director of pensions. As a result, bonds have been increased to 30% of assets from 25%.