Shropshire to diversify into private equity

The county council's pension fund invites tenders to manage a £20m private equity allocation.

Shropshire County Council has announced details of plans to invest up to 3 per cent of its £630m (E1bn) pension fund in private equity. The local authority fund is inviting tenders for the proposed £20m fund of funds mandate.

The £20m private equity allocation, which will commence operations on July 1 this year, is part of an ongoing diversification strategy at the Shropshire County Council pension fund. Neil Felton, Treasury Services Manager at Shropshire County Council, said: “Our intention is to continue a diversified pension fund strategy. Three per cent of the £630m under investment will be designated for the new private equity fund of funds.”

The council opted to invest in a private equity fund of funds in order to further its strategy of minimising risk whilst maximising the number of different asset classes into which it invests. 'We are looking for a manager that will spread its investments across funds in the US and Europe, as well as in the UK. We will amend our future investments in public equities in order to spread risk across as many sectors as possible.'

The Shropshire pension fund’s current managers include Henderson Global Investors, which runs a fixed income portfolio; Deutsche Asset Management and Barclays Global Investors, who both run UK active equities; Merrill Lynch Investment Managers, which runs European equities, and JP Morgan Fleming Asset Management, which runs US equities.