Clwyd fund awards long-term funding risk management mandate with strong sustainability element

The £1.1bn (€1.3bn) Clwyd Pension Fund in north Wales has awarded a £220m long-term funding risk management mandate, with a strong governance and sustainability element, to Insight Investment, the UK-based fund management firm.

The aim of the mandate, tendered at the end of December last year, is for a combination of advisory services and asset management techniques to establish what’s termed a “flight path” to manage risk and to create a less volatile path back to 100% funding.

The fund, which is administered by Flintshire County Council, was estimated to be just 59% funded as at December 2011 and it will be one of the first Local Government Pension Funds to implement the ‘flight path’ approach.
Corporate governance and sustainability had a weighting of 10 in the request for proposal (RFP).Among other factors were ‘philosophy, process and performance’ (weighting: 45) and people and communications (15). Fees and costs had a 15 weighting.

A maximum of 15% of the fund’s assets would be made available, on a phased basis, to implement agreed risk management and risk hedging strategies. One provider would be appointed. In the event, there were nine offers.

London-based Insight specialises in liability-driven investment and has £256.1bn under management.

The Clwyd fund’s latest Statement of Investment Principles (SIP) includes its Sustainability Policy and compliance with the Financial Reporting Council’s Stewardship Code. It says: “The fund has always considered Responsible Ownership as part of the SIP; however, these policies further enhances the approach and work will continue towards compliance in these areas.”