The innovative move follows a year after it cut its equities from 70% to 32.5% and diversified into hedge funds, infrastructure, commodities, high yield bonds, active currency, emerging market debt and property.
Nick Greenwood, manager of the fund, said: "We are going to start reviewing asset classes and saying ‘is this still good value or is it expensive, in which case why are we holding it?’"
To help the fund make these decisions, it has hired two specialist independent advisers, to assist in quarterly decision making alongside its existing investment adviser and in-house fund management team.
Greenwood said: "We are trying to get the committee to think in terms of a two to three-year view of an asset class. We don’t want to be shaving 0.5% off equities because the profit to earnings ratio is 15.5 and not 15. Neither do we want to be shoving money into equities if the price to earnings ratio is 30, because clearly they are overvalued."
Greenwood’s initiatives, which include making Berkshire the first local authority to carry out a longevity swap, are fed by a determination to remove the uncertainty on costs that have plagued contributing employers over the last 10 years.
Samuel Gervaise-Jones, director of business development UK at Bfinance, said that the desire by local authority funds to make investment governance changes had been sped up by the credit crisis.
"Some recognise that market volatility presents an opportunity to add value," he said. "This is in itself a signal that the risks associated with such short-term allocation decisions are too great and therefore [the funds] seek to put greater effort into getting the longer-term strategic allocation correct."
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