The move sees the firm continue to suffer following its merger with Scottish Widows. The merger triggered reviews at several local authority funds which were concerned it involved the Hill Samuel investment management operation switching from London to Edinburgh-based Scottish Widows.
The£750m Gloucestershire fund will now be split between three new managers - Clerical Medical, Henderson Investors and SG Asset Management - and run on a balanced basis.
Hermes will run a small specialist portfolio worth 2% of the fund. The county is disbanding its in-house index-tracking operation, despite strong performance over the last decade. County director Richard Cockroft said he had become 'nervous' as the dash for hi-tech stocks had forced passive managers to ditch traditional stocks and buy volatile dot coms.