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.
