Avon Pension Fund, Keynsham, England, terminated hedge fund-of-funds manager Lyster Watson, which ran about £10 million ($16 million), as part of the £2.7 billion fund’s reorganization of its hedge funds-of-funds portfolio, according to the fund’s website.
Lyster Watson was terminated because fund executives did not want to increase its small allocation, according to minutes of the March 18 meeting posted on the website.
Among the fund’s other hedge fund-of-funds managers, Man Group will have its allocation cut to £80 million from £110 million, while Signet and Stenham will see their allocations increase to £80 million and £40 million, respectively. Signet had run £45 million; Stenham, £10 million. Gottex’s mandate will remain around £60 million.
Investment consultant JLT Benefit Solutions advised on the revamp. The review was scheduled three years ago when the managers were hired; another review will be done in 2014.
The review found that hedge fund-of-funds managers’ combined performance was lacking, primarily because of losses in 2008. However, the portfolio met its volatility reduction, diversification improvement and capital preservation objectives, according to the website.
JLT found that managers overall held too many underlying hedge fund investments, which was diluting returns from active fund-of-funds management. That led to the reduction in Man’s allocation, and to the increase in those of Signet and Stenham, which run more focused strategies, according to the website.
Liz Feinstein, the fund’s investment manager, could not be reached for comment.