Mercer Investment Consulting has been appointed to provide investment advice to the Shropshire County Pension Fund. Specific services will include advice on the selection of a fund-of-hedge-fund manager and assistance with ongoing monitoring of the appointed manager. The mandate is estimated to be 55m.
“Increasingly, pension funds are looking for alternative sources of return,” commented Robert Howie, Senior Investment Consultant and lead hedge fund researcher at Mercer. “The returns generated by the sophisticated active strategies of hedge funds are attractive to a number of funds, especially when they also offer some diversification from the more traditional sources of return such as equities.”
Phil Guy, Head of Treasury & Pensions at Shropshire County Council, said: “The Fund is looking to make an investment in hedge funds to give further diversification to our investment structure and, although the Shropshire Fund is one of the best funded local authority schemes, we want to reduce the risk of further deterioration in our funding level from market falls. We are making a significant allocation to hedge funds because we believe that only a meaningful amount will have a noticeable effect on total returns. We have chosen to use a fund-of-funds approach because it typically provides a diversified portfolio, and a fund-of-hedge-funds manager brings professional hedge fund selection, portfolio management and monitoring.”