The £1.6 billion Camden Pension Fund is planning to terminate two managers that invest in diversified growth funds (DGFs) in order to match funding requirements for an infrastructure mandate.

Jon Rowney, executive director of corporate services and responsible financial officer at Camden, confirmed at the fund’s pension committee meeting on 18 July that its mandate with Standard Life Investments will be terminated, as well as a contract with Ruffer. Any residual left with Ruffer will be used to over-allocate to the infrastructure mandate, he explained.

A third DGF mandate with Barings will be retained, Rowney stated. A further review of the London Collective Investment Vehicle’s diversified growth fund mandates will be undertaken when the next strategic review of the fund occurs in 2020.

Camden has used DGFs since 2013 following a strategic review of its asset allocation in June 2012. The whole purpose of that review and subsequent reviews – September 2015 and March 2017 – was to reduce risk in the form of volatility and optimise returns, Rowney explained. The original report set out that DGFs are an approach to investing in a wide range of asset classes where active allocation between assets is a significant component of return and aims to produce a similar return to equities over the long term with less risk.

In recent years DGFs have come under scrutiny as they have failed to capture equity upside in a continuing bull market. In common with other DGFs, the fund’s managers have struggled too, delivering negative returns, Rowney noted.

A strategic decision was taken to invest £80 million in the London CIV’s latest offering, an Infrastructure sub-fund managed by StepStone.

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Published: August 1, 2019
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