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LGPS group invests £6.5bn in pooled funds

03 December 2015

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The Shires, a group of seven UK Local Government Pension Scheme (LGPS) funds, is investing £6.5bn in pooled funds managed by Legal & General

Funds from Cheshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, Warwickshire and Worcestershire make up the group.

LGIM says it is an early example of how pooling assets can be used to the advantage of the LGPS and the group will save more than 50% on fees alone, "illustrating the value of such initiatives" for similar local government pension funds.

The investment constitutes a mixed mandate spanning passive equity, passive fixed income and smart beta strategies in the UK and internationally.

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.

It took five months for the Group to move from initial discussions to an investment decision, following initial work carried out by Staffordshire, Cheshire and Shropshire.

In conjunction the Group, financial advisor bfinance conducted a detailed search of suitable pooled funds and implemented a rapid selection process, which was completed in less than two months.

The Group's investment comes at a time of significant political support for LGPS asset pooling.

A spokesperson for the group said the investment was a great result: "Joining forces with other pension funds has enabled us to unlock significant savings and gives clear and tangible evidence of what can be achieved if LGPS Funds are willing to work together and collaborate as equals.

"bfinance's thorough selection process gave us an excellent range of pooled funds to consider and we are very pleased with the quality of LGIM's offering combined with its expertise in passive management."

Sarah Aitken, head of distribution at LGIM, said: "We are delighted to have secured this appointment which extends our relationship with this very important group of authorities.

"Our pooled passive mandates can offer our clients a route to significant benefits of scale without compromising their individual investment and funding goals and we look forward to future discussions with other authorities as initiatives to deliver best value to taxpayers, scheme members and employers continue into 2016."

First published 03.12.2015

Lindsay.sharman@wilmingtonpplc.com