JP Morgan fired as manager of council pension assets

By Rachel Stevenson
Monday 18 November 2013 05:56

Cambridgeshire County Council has sacked JP Morgan Fleming Asset Management as the manager of £250m of its pension fund assets because of "poor performance".

JP Morgan has been running a balanced portfolio of assets including equities and bonds for the pension fund for nearly four years. The council has decided to end the mandate with JP Morgan because of its failure to meet the performance benchmark set by the trustees of the fund.

"We set the managers a performance target and they failed to achieve it. It was simply an issue of poor performance. We have now invited tenders from other managers," John Hopwood, the loans and investment manager at the council, said.

The trustees of the Cambridgeshire fund are looking for a new manager to run £130m from the old mandate and invest it in global equities. The remaining £120m will be distributed to funds held by Schroders and Deutsche Asset Management, which manage the rest of Cambridgeshire's £900m pension fund.

A spokeswoman for JP Morgan Fleming said the company did not comment on any mandate wins or losses. Its balanced pension funds have ranked 21st and 49th out of 75 funds over the past three years, according to the latest Caps Pooled Pension survey.

The Cambridgeshire trustees will make a decision on a new manager by December and the new manager should be in place by January 2003. Trustees are legally bound to protect their members' interests. Fund managers usually come up for review every three years.

The decision by Cambridgeshire highlights the growing pressure pension trustees are putting on fund managers. Mr Hopwood said local authorities were actively engaged in dismissing managers that underperform. The London Borough of Greenwich and Fife Council have both announced plans to replace the managers of their pension fund assets.

Recent legal actions taken by trustees against fund managers that have failed to deliver performance targets have put managers in the firing line. Merrill Lynch settled out of court with Unilever after being sued for underperformance.

"There will be greater scrutiny of managers coming under review now than there ever has been in the past five or 10 years," a spokesman for the National Association of Pension Funds said. "When stock markets are poor, trustees are more inclined to notice if the fund manager is underperforming."

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