A group of seven local government pension schemes (LGPS) has appointed Legal & General Investment Management (LGIM) to manage a £6.5bn pooled passive mandate.
The group, known collectively as ‘The Shires’, includes the county pension funds of Cheshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, Warwickshire and Worcestershire.
The mandate will span passive equity, passive fixed income and smart beta strategies in the UK and internationally. LGIM currently runs index mandates with certain members of the group, valued at approximately £3.9bn.
The individual funds will continue to track the indices that they were using prior to the appointment and have not had to compromise their investment strategies.
LGIM head of distribution Sarah Aitken said: “We are delighted to have secured this appointment which extends our relationship with this very important group of authorities. LGIM’s pooled passive mandates can offer our clients a route to significant benefits of scale without compromising their individual investment and funding goals. We look forward to future discussions with other authorities as initiatives to deliver best value to taxpayers, Scheme members and employers continue into 2016”.
Bfinance, who led the mandate search, claimed overall fee savings will exceed 50%.
Bifinance managing director and head of client consulting Pal Sarai said: “We welcome the group’s landmark investment in LGIM’s pooled funds and the excellent outcome of an extensive and rigorous selection process. Our tailored search methodology in a competitive landscape of pooled funds enabled us to identify an excellent match for the group’s requirements and in particular secure considerable savings on fees and a highly efficient approach to transition – key priorities for the group’s schemes. Given this success we expect significant interest from other local government pension schemes in similar arrangements to achieve more cost effective investment strategies.”
The announcement follows the government’s Autumn Statement and Spending Review in which it published criteria for LGPS scheme pooling.
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