London CIV gathers £2.3bn in assets but warns of compromise over investment strategy
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Hugh Grover
Member councils have already transferred £2.3bn of assets into sub funds run by the London Collective Investment Vehicle pension pool. But the CIV’s chief executive cautioned that member funds will have to compromise over investment strategy as the vehicle enters the next phase.
The London CIV started work before the government made LGPS pooling mandatory and is some way ahead of other groupings across the country.
Speaking to Room151, London CIV’s chief executive Hugh Grover said it was now approaching the end of its first phase of pooling – transferring similar funds run by the same managers for different local authorities.
He said: “The strategy we have been playing out since the beginning has been around existing commonality.
“We are pretty much coming to the end of that phase now.”
But he said that individual funds would need to compromise on their investment strategies in order to make pooling work.
He said: “Everybody quite rightly has their own unique investment strategy. Going forward, while we need as far as possible for the sub funds to speak to those varying approaches, it is not possible to be all things to all men to the nth degree.”
Assets so far transferred are spread between five sub-funds: a global equity alpha fund run by Allianz Global Investors; a diversified growth fund managed by Baillie Gifford; a global alpha growth fund run by Baillie Gifford; a global return fund managed by Pyrford International and an absolute return fund run by Ruffer.
The pooling that has taken place so far, he said, has already led to savings of £1.6m in annual management fees.
Grover said that he expects the CIV will eventually end up with 30 to 40 sub-funds managing a total portfolio of £29bn.
He said that the next phase of pooling will be more challenging because it will involve bringing together similar asset classes run by different investment managers.
The CIV is now looking to engage a consultant to work with it to create a global equities sub fund, and that detailed work will take place shortly on fixed income.
Grover would not comment on speculation that Newton Investment Management is close to being appointed to run another sub-fund.
Grover said: “The process has taken longer than we originally expected because we are the first ones to do it. Hopefully we are making it easier for those that follow on.
“I am always willing to meet with other pools if they think our experience is useful.”
