UK Public Pensions Put Active Managers Under the Microscope

(June 12, 2014) — Four UK public pension funds have hired the services of an active management monitoring service despite the government’s plans to move their assets completely into passive funds.

The pensions of Cumbria and Warwickshire county councils, along with two who preferred to remain anonymous, have signed a deal with Inalytics to provide data analysis and monitoring of fund managers.

The company claims that its analysis aims to “maximise the effectiveness of your search by showing you the managers with the investment skill to rise above the pack”.

Last month the Department for Communities and Local Government published a wide-ranging consultation paper with proposals for cutting costs in local government pensions. This included options for switching roughly £85 billion in active equity funds into passive strategies.

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But the deal with Inalytics shows the consultation has not deterred some pensions from investing in active management. Mathew Dawson, treasury and pensions group manager at Warwickshire County Council Pension fund, said: “While our active equity managers are both performing very well, demonstrating manager skill beyond the relative benchmark will provide clear evidence to the investment sub-committee.”

Inalytics declined to comment when asked about the potential effects of the consultation on the new deal.

The consultation is due to close on July 11 and can be viewed here.

(June 11, 2014) — PIMCO has hired former hedge fund manager Geraldine Sundstrom as managing director and portfolio manager, adding to the bond shop’s senior investment team.

Sundstrom will take up a leadership role in the firm’s asset allocation team, reporting to Mihir Worah, deputy CIO and head of real return and multi-asset strategies.

“Geraldine is another great senior portfolio manager hire for PIMCO,” Bill Gross, PIMCO’s CIO, said in a statement. “She represents an important addition of demonstrated leadership and skill as we continue to build out our multi-asset group for the benefit of our clients.”

Prior to joining PIMCO, Sundstrom was partner and leader of a $2.7 billion emerging market fund at UK-based hedge fund manager Brevan Howard. She announced her departure from the firm in February after Brevan shut down the fund following a 15% loss in 2013.

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She also served as a portfolio manager at Louis Bacon’s Moore Capital, and has also worked as a senior fixed income researcher at Citigroup Global Investments and currency manager Pareto Partners. Sundstrom has a master’s degree in finance from Birkbeck College at London University and two degrees from Université Paris Dauphine.

The Newport Beach, California-based bond shop has been actively reshaping its leadership following former CEO Mohamed El-Erian’s departure in March. After appointing six deputy CIOs to fill El-Erian’s shoes, Gross then hired famed economist Paul McCulley for a newly created post of chief economist to act as adviser to the firm.

PIMCO’s flagship Total Return Bond Fund suffered from a 13^th consecutive month of outflows in May. Its assets fell to $229 billion as of May 31, well below its peak of $293 billion last year.

Sundstrom will be based in PIMCO’s London office and will begin “no later than first quarter 2015,” the firm said.