The British Coal Staff Superannuation Scheme has made a legal complaint against Towers Watson over “negligent” investment advice which it claims resulted in losses of more than £47m.
The trustees of the scheme sent a letter of claim to Towers Watson on 4 September 2014 over alleged negligent advice in 2008 regarding a currency hedge, according to filings with the US Securities and Exchange Commission.
The claim regards a currency hedge implemented in connection with a £250m investment in a Bluebay local currency emerging market debt fund, which the trustees claim caused a “substantial loss” of £47.5m between August 2008 and October 2012.
The advice was given by Watson Wyatt prior to its merger with Towers Perrin in 2010, after which it became Towers Watson.
A spokesperson for Towers Watson said: “Towers Watson disputes the allegations brought by the British Coal Staff Superannuation Scheme and intends to defend the matter vigorously.”
The British Coal Staff Superannuation Scheme declined to comment.
Coal Pension Trustees chief investment officer Stefan Dunatov recently told portfolio institutional the fund still believes in the “emerging market theme”, including exposure to both equity and debt.
He said: “Deep down I think the EM middle class story is still a good one, the problem is how you access it. Right now it is probably more a play on the competence of the sovereigns, the governments, to deliver the generally positive outcomes for the overall economy, whereas EM equities is more a play on the local financial markets improving, expanding and seeing the emergence of local big names.
“Owning some EM equities is a good idea, owning some EM debt is a good idea, although that has certainly suffered from a de-rating in the last 12-18 months. Generally it is still a good story.”
You can read an interview with Dunatov in the upcoming February issue of portfolio institutional.
Comments