The Wales Pension Partnership’s first annual update
The Wales Pension Partnership (‘WPP’) Is pleased to present its first annual update. The progress made over the past twelve months reflects the ability of the eight Welsh Constituent Authorities to work together to deliver their shared set of objectives. Some significant milestones have been achieved during the year and it is extremely pleasing to see that these milestones have been extended across a variety of fields, including, Investments, Governance, Communications and Training. The annual update can be found under the Publications section, please click here.
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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.