Fund manager to focus LGPS resource at pool level

An investment manager has started its withdrawal from individual meetings with Local Government Pension Fund governance committees as the ramifications of pooling continue to play out.
In a recent communication to clients, Edinburgh based fund manager, Baillie Gifford, set out a pared-down approach to its interaction with administering authorities of the scheme, announcing: “We are aware that the nature of the relationship we currently have with our LGPS clients will change. The regulated pools will become our clients and each administering authority a client of the pool.
“We expect that regular quarterly reporting will occur at pool level, but we intend to continue running periodic strategy events to include appropriate officers, committee members and advisers.”

Baillie Gifford will now see Northamptonshire County Council and Isle of Wight Council, both of whom  are invested in the manager’s diversified growth fund, through a joint meeting of representatives.
A spokesperson for the firm said: “In order to achieve immediate savings ahead of the formal pooling process Northants and Isle of Wight requested that the assets of both funds were aggregated for the calculation of fees and that Baillie Gifford only attend meetings of a joint committee of representatives from Northants and Isle of Wight.  This collaboration resulted in fee savings for both Northants and Isle of Wight.”
A statement from Northamptonshire fund said: “Outside of the work being undertaken by the ACCESS asset pool, the Northamptonshire Local Government Pension Fund and the Isle of Wight Pension Fund have worked collaboratively, supported by the knowledge, experience and initiative of Baillie Gifford, to develop a more efficient solution for their current portfolio of investments.

“This solution encourages the Northamptonshire fund to consider itself a ‘shared’ customer with the Isle of Wight resulting in a shared reporting arrangement.”
As pooling progresses, most pools will manage governance of arrangements with fund managers, including their selection and scrutiny.
Asset allocation decisions will remain with individual funds, and it is likely that fund managers will continue to attend these meetings.
Tom Wright, client director at Baillie Gifford, told Room151: “ We value these relationships and are committed to continue to provide the best possible levels of service to our LGPS clients and the pools, however their reporting and governance structures may evolve.”

Separately, LPP Investments, the investment vehicle run by Local Pensions Partnership has launched the search for managers for a £300m diversified credit mandate.
LPP confirmed to Room151 that the mandate will target a return of cash plus 4% to 6% over a full market cycle.
In a separate tender, the Border to Coast LGPS pool is looking to appoint a service provider who will support core capabilities necessary to achieve its objectives.
These core services include outsourced dealing, middle office services, depositary services and fund administration.
The total value of the contract is estimated at around £65m.