Yvonne Keitch, a spokesperson for the £800m local authority pension scheme, said that Deutsche had failed to better the fund’s benchmark, the Local Authorities WM Universe.
The outperformance target is 1 per cent a year over a rolling three-year period and the Rhondda scheme reviews manager performance on a quarterly basis.
However, she added: “Deutsche is welcome to reapply for the contract if it feels it can meet the needs of the pension fund in the future.”
F&C Management also runs a balanced equity mandate worth £330m for the scheme.
Isis Asset Management manages a £135m fixed income portfolio, while property, unit trust and venture capital funds totalling £6m are managed internally.
Ms Keitch said the balanced equity manager has to hold a minimum of 40 per cent in UK equities and no more than 10 per cent in cash.
The Local Authorities WM Universe has about 54 per cent in UK equities and the pension fund does not want to go too far outside that benchmark average.
She said the make-up of the remainder of the portfolio would not be decided until an asset-liability modelling study, earmarked for December, had been carried out.
“We are planning to move towards customised benchmarking because it meets the liabilities of the pension fund more than a peer benchmark does. Most pension funds are going down this route,” said Ms Keitch.
