The Local Government Pension Scheme pool ACCESS has appointed UBS Asset Management to run its members’ passive investments, outside of its main investment vehicle.
ACCESS says that members will collectively save £5m a year in management fees through the deal, which will see each member fund contract individually with the fund manager.
Councillor Andrew Reid, chairman of the ACCESS joint committee, said: “I am delighted we have started the process of pooling early with some tangible, long term savings and look forward to a smooth transition to UBS.”
The deal means that ACCESS will hold £11bn—around a quarter—of its £41bn of overall assets outside of its proposed Authorised Contractual Scheme (ACS), which will oversee collective investments on behalf of the pool.
The pool is one of two which are seeking to outsource the management of their ACS to a private firm, as an alternative to hiring its own management staff.
Last year, the other pool to go down this route, covering Welsh LGPS funds, appointed investment manager Blackrock to look after its own £2.8bn passive mandate.
This means the Welsh percentage of passive investments held outside of collective pooling arrangements works out at around 22% of its total.
David Walker, head of LGPS investments at pensions adviser Hymans Robertson, said that the pools’ initial submissions to government, made last year, had been clear that passive assets may sit outside formal pooling vehicles.
He said: “Reasons for not putting a pool wrapper around these assets were due to the practicalities around the structures of existing passive mandates—through life funds which it may not be possible to hold within an Authorised Contractual Scheme.
“In addition, funds would lose some of the benefits of being part of a larger passive universe such as crossing trades to reduce transaction costs.
“Pools have instead sought to negotiate passive fee terms for all funds within the pool so in many cases putting some form of additional pooled fund wrapper around this would be an additional expense as things stand with limited benefit.”
Meanwhile, the London Collective Investment Vehicle pool has announced the launch of four more sub-funds, taking the total to 12.
The new funds are the Longview Global Equity (capped at £990m0, Henderson Emerging Markets (£335m), Epoch Global Equity Income (£750m) and RBC Sustainable Equity (£1bn).
Hugh Grover, chief executive of London CIV, said that the total value of assets now transferred to the CIV has reached £5.6bn, in addition to the fee reductions achieved on the passive investments which sit outside the pool structure.
Separately, Blackrock, the world’s largest fund manager, has signed up to the LGPS code of transparency, which was announced in May by the LGPS Advisory Board to encourage a move toward investment fee transparency and consistency.
In a statement on the board’s website, Blackrock said: “BlackRock were supportive of the Code of Transparency initiative from the start, and participated in designing the common industry standards used to provide cost data to our LGPS clients. We look forward to providing the data for the first reporting period in 2018.”
The current number of signatories to the code stands at 21.
Meanwhile the London Collective Investment Vehicle pool has announced the launch of four more sub-funds, taking the total to 12.
The new funds are the Longview Global Equity (capped at £990m), Henderson Emerging Markets (£335m), Epoch Global Equity Income (£750m) and RBC Sustainable Equity (£1bn).
