Hewlett-Packard Ltd. Retirement Benefits Plan trustees terminated a passive U.K. equity portfolio and a passive U.K. bond portfolio managed by Phillips & Drew and appointed PIMCO to run a global fixed-income portfolio and a U.K. bond portfolio. Andrew Webb, pensions manager at the £500 million ($714 million) plan, would not provide portfolio sizes.
The plan dropped Phillips & Drew in part because trustees decided to use preferred provider managers that are approved by the plan sponsor and offer lower fees. These managers Capital International, Merrill Lynch Investment Managers, PIMCO and Goldman Sachs have been approved by Hewlett-Packard, Palo Alto, Calif., to manage specific mandates to specific benchmarks for the plans European pension plans. Local trustees are not obliged to hire these managers. Also, "Phillips & Drews historic underperformance was a contributory factor, said Mr. Webb.
Phillips & Drew Director Paul Yates said he was disappointed about the loss of the mandate. "We have produced an average performance for them over 10 years. We have outperformed the benchmark they set us, albeit by a smaller margin than required, he said.
Incumbent Capital International manages global equities and will be retained. Incumbent Deutsche Asset Management also will be retained because none of the preferred managers offers a U.K. equity strategy.
Hymans Robertson assisted.