London Pensions Fund Authority dropped Prudential Portfolio Managers, Phillips & Drew Fund Management and Mercury Asset Management as a part of an overhaul of its £2.8 billion ($4.48 billion) plan.
Trustees decided to adopt a more active investment strategy now that the plan had become fully funded following five years of investing heavily in index-linked gilts, said LPFA Chief Executive Peter Scales.
Changes to the asset allocation for the plan are: U.K. gilts at 12.6%, up from 3.4%; index-linked gilts at 36.9% from 48.1%; U.K. equities, 31.4% from 25.6%; overseas equities, 13.2% from 8.8%; overseas bonds, 1.6% from 3.6%; and managed cash, to zero from 4.1%.
The LPFA hired Henderson Investors to manage a £300 million international bond portfolio and a £600 million balanced portfolio; Goldman Sachs Asset will manage a £400 million multiasset portfolio; and Legal & General Investment Management will be responsible for a £500 million passive equity mandate.
Hymans Robertson advised.
Both MAM and Phillips & Drew had managed balanced portfolios for the plan, while PPM was responsible for an active equity portfolio. The three were dropped partly for performance reasons but largely because trustees wanted a fresh approach, said Mr. Scales.
None of the three managers would comment.