Search broadens for active global equity

27 Jul 2016 Search broadens for active global equity

We have engaged Mercer and Redington to assist with the search for active global equity. This is the first ‘Phase III’ engagement, whereby the CIV is going out to the broader market, as Phase II (where investment managers are drawn from the ranks of managers and mandates already represented in London) draws to a natural close.

In keeping with our philosophy of increasing, where possible, choice and flexibility for the boroughs, the team is adopting a ‘core and satellite’ approach. This approach aims to give boroughs a suitable choice of strategies, which can then be blended according to each borough’s risk budget. The intention of such an approach is to reduce individual manager and / or strategy risk. Making a large allocation to just one or two active strategies naturally increases concentration risk, and an intelligent blended approach should improve the risk / return profile without sacrificing choice. In the past, due to size constraints, such an approach would have been impractical due to search costs, governance demands and high fees (the result of having several small allocations). We believe that this approach should offer the boroughs the best risk / reward profile. Boroughs can of course retain their current approach if they wish to do so.