The fund, which is managed by Lee Freeman-Shor, adopted a GDP-weighted approach to its strategic asset allocation. This will allow its to benefit from greater country and currency diversification.
Previously, the portfolio used a custom benchmark approach to asset allocation, compromising a 50% market cap exposure to UK equities and 50% GDP-weighted exposure to global equities.
Freeman-Shor said: “A GDP-weighted approach leads to greater regional, country and currency diversification and ensures the fate of the fund is not tied to the fate of any single exposure.
“In the context of the big three risks – the European crisis, US fiscal cliff and global growth – a more diversified approach is seen as very attractive.”
The move has led to significant changes in the portfolio’s allocations. The weighting to Europe including the UK has been cut from 61.89% to 26.66% and exposure to the US lifted from 13.66% to 26.29%. Asia Pacific excluding Japan rose from 8.33% to 13.66%.
In addition, Tony Rosenthal of TimesSquare Capital Management has been awarded a £44m mandate in the fund to increase its exposure to US equities.
Rosenthal will focus on small and mid cap stocks and complements Tom Marsico, who runs another US mandate on the portfolio and concentrates on large caps.
Freeman-Shor added: “The introduction of Tony Rosenthal to the US line-up is a welcome addition to the fund. He brings with him a wealth of experience in US equities and has a phenomenal track record in managing very focused portfolios.”
