Lancashire seeking transition managers ahead of ‘significant’ allocation changes

first_imgThe UK’s Lancashire County Pension Fund is looking to hire several transition managers to handle mandates worth as much as £5bn (€6.2bn).The local authority scheme said the tender, which aimed to set up a framework with several managers, was being put in place as it reviewed “various aspects of the investment arrangements” at the fund.“As a result, [the fund] expects to make significant changes to its strategic asset allocation, and also potentially its stable of investment managers,” the tender said.The framework would then allow the local authority fund to conduct a “lowest-price mini-competition exercise” when it required transition management services. It said the two-year contract could see several transition mandates tendered, with the fund estimating the value of mandates starting at £50m, but potentially covering nearly all of the fund’s £5.1bn in assets under management.Interested managers have until 21 October to express interest through the council’s procurement department.Lancashire currently manages around one-third, or £1.9bn, of its assets internally, nearly doubling the percentage of in-house assets over the course of the most recent financial year.  Until last year, it managed nearly £220m of emerging market ETFs in-house, and it continues to oversee some fixed income, equity and property, as well as £172m in infrastructure funds, from Preston.At the end of March, it employed nine external managers, including Baillie Gifford, Robeco and MFS Investment Management.Magellan, Morgan Stanley, Natixis Global Asset Management and AGF Management were also in charge of parts of the fund’s equity holdings, while Capital Dynamics oversaw its private equity and infrastructure fund and Knight Frank its property portfolio.According to a portfolio breakdown, the fund also had £85m in assets overseen by Nomura and BNY Mellon’s transition management services, with the latter firm claiming the lion’s share as it handled the transition of £1bn in credit and fixed income holdings since March 2013.A large amount of this may have been diverted to Lancashire’s in-house team, with assets within its credit strategies portfolio increasing by £360m, to £784m, over the course of the last financial year.Over the same period, the bonds and cash portfolio managed in-house increased by £491m, according to figures from March 2014.According to minutes from its 6 June pensions committee, the holdings could also form part of a shift in its strategic asset allocation, first agreed in 2010.The minutes said: “Whist the fund continues to reallocate its investments in line with the revised investment strategy, amounts earmarked for future investments are held in transition accounts, cash, liquid bonds and directly held investment grade bonds.”The committee also said it would explore greater collaboration with neighbouring local authority schemes in future.last_img

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