The GBP1.4 billion Clwyd Pension Fund has appointed Man FRM to manage its hedge fund allocation, which following an investment strategy review by consultant JLT Employee Benefits, has been set at 9 per cent.
This allocation, which includes managed futures, will be managed by Man FRM via its managed account based Local Government Pension Scheme (LGPS) platform and will replace the Fund’s previous allocations to Liongate, SSARIS, Bluecrest, and Duet. The allocation by the Clwyd Pension Fund follows the announcement in January 2015 that the Cornwall Pension Fund had appointed Man FRM to manage its hedge fund allocation.
Man FRM’s managed account LGPS solution offers a tailored approach for each LGPS looking to invest in hedge funds, while at the same time seeking to facilitate significant cost efficiencies via collaboration across schemes. The solution also provides each participating LGPS with complete transparency into underlying positions, risks and costs, together with full legal control of the underlying assets.
The Man FRM solution provides a sliding management fee that scales down based upon the size of the collective assets managed. This second major allocation from an LGPS Fund will therefore reduce management fees for both existing and prospective investors.
This collaborative effort between Clwyd and Cornwall illustrates how schemes are increasingly working together with the asset management industry to provide innovative and cost effective solutions.
Kieran Harkin, Director, JLT Employee Benefits, says: “Following significant due diligence, Man FRM was identified as offering a comprehensive solution to support the Clwyd Pension Fund in setting up a customised vehicle for its hedge funds and managed futures allocation. The characteristics of Man FRM’s managed accounts LGPS solution are compelling, as individual Funds retain their independence of decision making in respect of strategy, while benefiting collectively from fee savings via total assets under management. In the context of the current LGPS environment, the collaboration between Clwyd and Cornwall should be seen as an example of what can be achieved by Funds working together in a proactive way.”
Luke Ellis (pictured), President of Man Group (of which Man FRM is a wholly owned subsidiary), says: “We are delighted that the quality and value represented by the Man FRM proposal has been further recognised by the Clwyd Pension Fund and JLT, following the Cornwall Pension Fund allocation awarded earlier this year. At Man FRM, we have long acknowledged that investors demand the highest standards in transparency, control and governance. These critical factors are central to our managed account based portfolio design and construction, developed over the last 15 years. We also fully recognise the pressures that LGPS Funds are under to achieve cost reductions. Our tailored solution for LGPS Funds treats these funds as a single investor with regards to pricing, but as quite different investors with regards to the eventual solution provided.”
