Michael Taylor, executive director for performance and resources at Surrey County Council, said the aim of the new investment structure was to ensure that returns were maximised without increasing the overall risk in the fund’s investment strategy.
He explained: “The aim is to make a more cost effective use of the risk budget. Watson Wyatt advised us that we could achieve our objective of 1 per cent outperformance above our benchmark by using a passive core with specialist equity, bonds and property and some high conviction satellite managers.”
The equity portfolio also provides for a 5 per cent allocation to private equity.
The shift to specialist management led to Baring, Deutsche and UBS losing balanced briefs. UBS, however, picked up two specialist mandates – a Ł130m UK equity brief and a Ł45m global equity brief.
SG won a Ł125m UK equity brief and Marathon a Ł100m global equity brief. Citigroup took a Ł30m emerging markets equity brief. A Ł150m global bonds portfolio was awarded to Western, while a Ł50m property fund of funds mandate went to ING Real Estate Investment Management.
L&G will run 20 per cent of the fund in a multi-asset passive strategy. The remaining 17 per cent of the fund will be split between US, UK, Europe ex-UK and Pacific Basin equity mandates.
