Somerset CC Pension fund is set to diversify by moving £30m into a higher-performing investment sector. The fund announced it intended to move the money into alternate emerging markets to generate a better return for its 38,000 active and retired members. The pension fund has a portfolio worth some £55m, and the emerging markets have traditionally offered a higher rate of return to City institutions because of the higher risk compared with traditional options. Somerset has put the business out to tender so that firms in the Square Mile can compete for the lucrative contract. However they will be expected to out-perform an emerging markets benchmark. Anton Sweet, funds and investments manager at Somerset, said the money would come from reserves rather than moving investments. ‘Theoretically, this is a reallocation away from existing equities mandates, but in practice it will probably be taken from cash,' he said. The change is expected to come on stream next year, and the fund is also looking at a further diversification into the private equity market. As the credit crunch bites, funding sources for global investors have largely dried up. Local authorities could be in a position to benefit.
