Lincolnshire County Council Pension Fund, Lincoln, England, is planning searches worth almost half of its total £940 million ($1.5 billion) in assets, the result of an asset allocation study, said Michael Batty, assistant investment manager.
Under the new asset mix approved late last year, the county fund's global equity allocation will increase to 40% of total assets from 32.5%, while U.K. equities will fall to 20% from 32.5% and bonds will drop to 13.5% from 18.5%. Also, a 5% allocation to private equity will be changed into a 15% allocation to alternatives, while the fund's property allocation will remain at 11.5%.
The allocation review was conducted by investment consultant Hymans Robertson and completed in October. Mr. Batty said the changes were made to increase diversification and to remove geographical constraints for equity managers.
The fund is now searching for at least one active global equity manager to run £200 million. It will seek a bond manager for a £126.9 million portfolio and an alternatives manager for £94 million within the next six months or so. HSBC Actuaries and Consultants is assisting in the global equity search.
Funding will come in part from the termination of Martin Currie, which runs £85 million in active U.K. equities. Mr. Batty said the manager is being terminated as part of the move to reduce U.K. equities in favor of global equities and does not reflect performance.
The fund now manages in-house £137 million, or about 15% of the total assets, in passive U.K. equities benchmarked to the FTSE All Shares index; that will increase to hold the full 20% domestic equity allocation. Invesco Perpetual, which manages £151 million (16%) in enhanced index global equities, will see its mandate increase to 20% of total assets.
Further funding will come from terminating a £33 million U.K. equities account managed by New Star Asset Management and reducing Aviva Investors' active bond mandate to £126.9 million from about £145 million. New Star was terminated in December because of personnel changes in advance of its acquisition by Henderson Global Investors last month.
Sometime this fall, Lincolnshire will hire a search consultant before issuing an RFP for two managers to handle its entire £126.9 million bond portfolio, which will be split into an absolute return portfolio and a passive one.
Mr. Batty said pension officials have not decided whether Aviva will be terminated. The proportion in each strategy and the benchmark for the passive strategy have not been determined, he added.
