‘Lifeboat’ Pension Protection Fund adds nine more hedge funds to GTAA panel portfolio

November 06, 2013  

Martin Clarke
The Pension Protection Fund (PPF), the lifeboat fund for collapsed pension schemes in the UK, has added a number of new hedge fund names to its portfolio, more than doubling its total roster.

There are now 15 managers on what the scheme calls its ‘GTAA panel’. Global tactical asset allocation is a term that has been used in pension fund management for longer than the term global macro has been acceptable. Now, however, this bucket tends to include global macro and other strategies such as multi-strategy that allow a mandate for tactical investments.

New additions reveal an interesting slant. One new hire is Harmonic Capital Partners, the London-based operation headed up by Richard Conyers and David Pendlebury. The firm currently runs around $850 million in a global macro strategy.

Another new hire is Arrowgrass Capital, the London-based mixed arbitrage multi-strategy fund led by Nick Neill, which has total assets of around $3.8 billion. Arrowgrass appears to be fast gaining popularity among institutional investors: earlier this year it was also hired by TfL Pension Fund.

After this pair perhaps the next most interesting name on the list is Two Sigma, the New York-based operation headed up by John Overdeck and David Siegel. This firm is popular with many US registered investment company funds. Also on the list is AQR, the New York-based firm managed by Cliff Asness.

Another new hire is Brevan Howard, which is of course a mainstay of institutional buy lists. This ‘brand’ theme continues with the other new hires, which reads very much as a list of blue-chip names. They include Caxton Associates, the Princeton, New Jersey-based shop headed up by Bruce Kovner; Fortress, the $10 billion New York based shop headed up by Michael Novogratz and Adam Levinson; Boston-based GMO; and Man Investments.

These names sit alongside the scheme’s original roster of six managers: Aspect Capital, the London-based managed futures strategy whose flagship Aspect Diversified fund is managed by Anthony Todd and which features as a direct holding in the portfolio of Leicestershire pension fund, among others; BlueCrest Capital, the big mixed arbitrage outfit headed by Mike Platt, which is also a holding in the TfL portfolio; and Cantab, the systematic global macro program that is based in Cambridge in the UK and headed up by Ewan Kirk. The others are Neuberger Berman, Deutsche Bank spinout QS Investors, and Winton Capital, the London-based firm headed by David Harding, which also features in numerous institutional portfolios, including MassPRIM.

The scheme began investing in GTAA managers more than three years ago, and during that time it has seen its overall portfolio nearly quadruple from $7.3 billion to around $24 billion.

It expects to see considerable asset growth going forward and will continue to work towards its short term goal of diversifying its overall asset mix. It intends to achieve this by investing 20% of the fund into alternatives.

Martin Clarke, executive director of financial risk at the PPF, said: “GTAA differs from traditional approaches to fund management. As an asset class it tends to have enhanced diversification properties, which helps control the level of risk and this fits in with our investment philosophy.”

As the PPF’s assets continue to grow, Clarke added, the roster of GTAA managers is also likely to swell, although clearly the big name managers already selected are capable of handling sizeable allocations in their own right.

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