The £40bn BT Pension Scheme (BTPS) has confirmed it has pulled an £8.4bn inflation-linked government bond mandate from Hermes Investment Management.
The scheme said it was moving the assets to passive mandates to best meet its ongoing needs and because it would be more cost-effective.
Hermes was established in 1983 as the primary manager of the BTPS and remains the scheme’s largest manager.
A statement from BTPS said Hermes will continue to run between 30% and 40% of its assets.
“Hermes has delivered strong performance for this mandate and across the portfolios they manage for us,” it added.
Hermes also confirmed the move in a statement.
It said: “I can confirm we will be winding down our global government and inflation-linked offering over the coming months. We are consulting with the individuals directly affected by this decision.
“BTPS will be transitioning their £8.4bn inflation-linked government bond mandate to passive mandates in 2016. BTPS remains our largest client and an important strategic partner, investing across a wide range of our public and private markets capabilities including real estate, infrastructure, private equity and private debt. As BTPS’ largest manager we continue to work closely with them to develop new initiatives that meet both their requirements and those of other institutional investors.”
Hermes said it had increased third-party assets from £1.8bn to £9.2bn since January 2012 and has grown third-party revenues from 18% of total revenues in 2012 to 57%, after allowing for the BTPS government bond transition.
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