The Wales Pension Partnership is the first LGPS investment pool to appoint a pool operator
The Wales Pension Partnership (WPP) today announces the appointment of Link Fund Solutions Ltd (Link) to establish and run a collective investment vehicle for the sole use of the Local Government Pension Scheme (LGPS) funds in Wales.
The appointment of Link as the FCA authorised operator follows a rigorous procurement process run by the WPP and its advisors, Hymans Robertson and Burges Salmon. This will enable the pooling of circa £15bn of assets across a range of asset classes. The passive mandates of all 8 LGPS funds in Wales are already jointly invested, delivering estimated fee savings of over £2m per annum on assets in excess of £3bn. The appointment of Link represents another key milestone in the pooling process, working towards the Westminster Government’s April 2018 target date.
Link will establish and run an Authorised Contractual Scheme (a tax efficient UK collective investment vehicle) on behalf of the WPP. The ACS will have sub-funds in a range of asset classes that will meet the needs of the investing authorities, enabling them to execute their differing asset allocation strategies. With the support of Russell Investments, and in consultation with the eight individual local authority funds, Link will begin the process of appointing a number of investment manager firms, while the LGPS funds will retain full control over strategic asset allocation decisions. By using fewer investment manager firms with larger mandates, it is expected that the pool will deliver fee savings, one of the primary aims of Government policy.
The WPP’s Joint Governance Committee was established earlier in 2017 and is responsible for oversight of the pool’s operator, Link, and the services it delivers to the LGPS funds in Wales.
Councillor Stephen Churchman, Chairman of the Joint Governance Committee: “After a rigorous selection process, we are delighted to announce the appointment of Link as the operator company for the LGPS investment pool for Wales. The LGPS administering authorities in Wales have a long and successful history of collaboration. We are on track to have the pool operational in early 2018 delivering further investment manager fee savings that will benefit all of the LGPS funds in Wales.”
Carmarthenshire County Council acts as Host Authority, liaising day to day with the operator, Link, on behalf of all of the LGPS funds in Wales.
Chris Moore, Director of Corporate Services at Carmarthenshire County Council (Host Authority for the WPP):
“The appointment of Link is a significant milestone in the establishment of a £15bn investment pool for the LGPS funds in Wales. We look forward to working with Link to deliver the benefits of investment pooling for the LGPS in Wales.”
The Wales Pension Partnership (WPP) comprises of the following LGPS funds: Cardiff and Vale of Glamorgan, City and County of Swansea, Clwyd, Dyfed, Greater Gwent (Torfaen), Gwynedd, Powys and Rhondda Cynon Taf.
Other NewsView All
Wales Pension Partnership (WPP) launches an Emerging Markets Equity Fund
The Wales Pension Partnership (WPP) is pleased to announce the launch of the LF Wales PP Emerging Markets Equity Fund on 20th October 2021 with an AUM of £505m. Link Fund Solutions Limited, as Operator of the Fund, have appointed investment solutions provider Russell Investments Limited as Portfolio Manager of the multi-manager strategy. The Fund will leverage Russell Investment’s Enhanced Portfolio Implementation (EPI) framework, in order to reduce aggregate levels of trading and to provide the WPP with improved governance and control from an ESG perspective. The Fund aims to achieve reduced carbon footprint and carbon reserves at Sub-fund level, targeting 25% lower than the MSCI EM Index.
Sub-delegates include; Artisan Partners, Axiom International Investors, Bin Yuan Capital, Barrow Hanley Global Investors, Numeric Investors and Oaktree Capital Management.
Wales Pension Partnership (WPP) launches decarbonisation initiative
The Wales Pension Partnership (‘WPP’), the pooling entity for the eight Welsh LGPS Funds, has implemented a new decarbonisation initiative across the £2.5bn of its global equity assets managed by Russell Investments.
This will see the WPP’s global equity mandate achieve a targeted reduction in both its carbon footprint and fossil fuel reserves exposure by 25% relative to its benchmark (the MSCI All Country World Index). The portfolio will also exclude companies that rely on coal to generate revenues.
The WPP is utilising Russell Investments’ Enhanced Portfolio Implementation (EPI) infrastructure to achieve its decarbonisation targets.
EPI leverages a centralised trading and portfolio management process with Russell Investments responsible for executing the investment strategies of the WPP’s underlying fund managers. With this framework, the WPP is able to benefit from greater control and customisation around decarbonisation and other ESG-related objectives. EPI also seeks to deliver trade efficiencies through sizeable reductions in trading activity.
The decarbonisation initiative represents a positive step towards the WPP’s climate related and wider ESG goals.
Commenting on the launch of the new decarbonisation initiative, Cllr Glyn Caron, chair of the Joint Governance Committee at the Wales Pension Partnership, says:
“Climate change not only poses significant challenges for society; it also represents a financial risk for our Constituent Authorities and scheme members. By reducing the carbon exposure within our active equity assets, in partnership with Russell Investments, we are seeking to address these challenges. We see this as a positive first step in meeting our long-term sustainability goals.”
Jim Leggate, Managing Director, UK Institutional & Middle East at Russell Investment, also comments:
“Issues around climate change and the transition to a low carbon economy are increasingly critical issues that institutional asset owners are seeking to address. We are pleased to support the WPP in their carbon reduction objective as part of a wider framework designed to reflect the evolving needs of their members. Through our Enhanced Portfolio Implementation framework, we are well positioned to deliver a holistic, efficient and low-cost customised solution that evolves with the combined long-term sustainability goals of the WPP’s Constituent Authorities.”
Eamonn Gough, Senior Relationship Manager at Link Fund Solutions, adds:
“As an engaged asset owner, the WPP understands the crucial importance of supporting the transition to a low carbon economy. The enhanced implementation framework being utilised has the advantage of keeping the existing underlying managers and the broad operating structure whilst enabling the WPP to achieve aggregate portfolio decarbonisation.”
For more information:
Notes to Editors:
* List of Constituent Authorities
- Cardiff & Vale of Glamorgan Pension Fund
- Clwyd Pension Fund
- Dyfed Pension Fund
- Torfaen Pension Fund
- Gwynedd Pension Fund
- Powys Pension Fund
- Rhondda Cynon Taf Pension Fund
- City and County of Swansea Pension Fund
The Wales Pension Partnership (WPP) was established in 2017. The WPP is a collaboration of the eight LGPS funds (Constituent Authorities) covering the whole of Wales and is one of eight national Local Government Pension pools.
It has a long, successful history of collaboration, including examples that pre-date the Government’s pooling initiative. It is proud of its unique identity as a Pool – its Constituent Authorities represent and span the entirety of Wales. Being democratically accountable means it provides the best of strong public sector governance and transparency.
WPP’s operating model is designed to be flexible and deliver value for money. It appointed an external Operator and makes use of external advisers to bring best of breed expertise to support the running of the Pool. The Operator is Link Fund Solutions and they have partnered with Russell Investments to manage the investments and assist in the reduction of investment management costs for all the Constituent Authorities.
WPP wins the Innovation Award at LAPF Investments Awards 2020
We are delighted to have won the Innovation Award at LAPF Investments Awards 2020.
Like other pools, we adopted a multi-manager approach to fund construction, to deliver the strongest possible risk-adjusted returns while achieving significant savings. However, this award recognises we made a significant step in innovation, adopting an “Enhanced Portfolio Implementation” (EPI) framework within our equity funds.
Managed by Russell Investments (within our ACS fund structure hosted by Link Fund Solutions), EPI brings the implementation of multiple equity manager portfolios into one holistic portfolio. Whilst new to LGPS, this leverages proven technology and has two significant benefits for our host authorities:
- Meaningful cost savings over and above the manager fee savings already achieved;
- Improved Governance from an ESG perspective: we have taken steps to lower our carbon exposure by an additional ~25% without impacting manager alpha. This is hugely powerful in supporting our administering authorities’ work towards their decarbonisation goals.
Not only has this been powerful for our members, but we believe this step also demonstrates that LGPS pooling can go beyond manager fee negotiations, accessing a second tier of cost saving and improved governance.