The Shropshire County Pension Fund, a 1.3 billion-pound ($2 billion) British local-government pension plan, pulled an investment with Man Group Plc, citing the hedge fund’s fees and poor performance.
The fund terminated an investment with Man Group’s FRM Holdings Ltd. and will next month invest 63 million pounds in Brevan Howard Asset Management LLP’s multi-strategy fund, Justin Bridges, Shropshire’s head of treasury and pensions, said by telephone from Shrewsbury, England. The fund invests in other pools overseen by Brevan Howard.
“We want to pay a reduced level of fees,” Bridges said. The pension plan was also disappointed in the FRM fund’s “poor performance,” he said, declining to disclose the fund’s returns, citing confidentiality agreements.
FRM’s Absolute Return Strategies Fund invests in hedge funds run by other managers and charges clients an additional layer of fees to the 2 percent management fees and 20 percent of profits they charge. London-based Man said in May that clients withdrew a net $3.7 billion from its range of hedge funds in the first quarter, the seventh consecutive quarterly outflow.
Shropshire invests 125 million pounds, or 10 percent of its total assets, in hedge funds, now split evenly between the new Brevan Howard fund and a fund-of-hedge-funds run by BlackRock Inc.. The pension plan will keep that investment, Bridges said.
Spokesmen for Man Group and Brevan Howard declined to comment on Shropshire’s decision.