Group of 20 funds join search for pooling solution

A group of local government pension funds has joined forces to provide a coordinated response to the government’s demand for the pooling of investments.

The group of around 20 funds has set up 10 research projects, or work streams, to consider various options on how pooling could work, coordinated by pension consultancy Hymans Robertson.

The group hopes that its menu of proposals could be produced before February, when government is expected to ask funds to express their preferred approach.

Linda Selman, head of local government investment at Hymans, told Room151: “We don’t expect that this report will say there is just one answer. It is likely to outline a number of options and outline the pros and cons of each of them.”

Work streams have been established for different types of asset class, including equities, bonds, property and infrastructure.

Another will look at regional collective investment vehicles (CIVs), while another will consider whether exceptions could be made allowing funds to hold certain investments outside of pooled arrangements. Another is examining how existing internal management arrangements could be brought together.

She added that all of the work streams are considering issues relating to governance and ethical and responsible investments.

The project will also study existing proposals and emerging arrangements such as the London CIV and a proposed collective passive management vehicle.

“Nobody has a monopoly on good ideas – many of the members of our initiative are also involved in other proposals so that will help us keep an eye on the whole picture,” Selman said.

The group has just sent out a request to all LGPS funds requesting data about their asset allocations, the fees they are paying and the fund managers they are using. It is hoped that this information will strengthen the evidence base for the research.

A panel of LGPS representatives will sit above the work streams and pull their work into a final report.

Selman said that although the proposals would take it as read that the London CIV will progress as planned, the final shape of pooling could consist of a combination of regional and asset-class-based pools.

Photo (cropped): Simon Cunningham, Flickr.