The Border to Coast Pensions Partnership has launched a £2.6bn global equity index fund – the first time the Local Government Pension Scheme (LGPS) pool has added a passive strategy.
The fund, a global multi-factor equity strategy, is designed to deliver “significant savings in fees” compared to existing strategies used by the pool’s 11 partner funds, according to a press release.
The fund, run by BlackRock, blends equities and strategies across five ‘factors’ – value, momentum, quality, low volatility, and size. Border to Coast said it will retain full control over aspects such as decarbonisation and exclusion policies.
It aims to outperform the MSCI All Country World index by 0.5% a year net of fees, measured over rolling five-year periods.
Five LGPS funds within the Border to Coast pool have invested in the fund at launch: Tyne & Wear, Lincolnshire, Cumbria, Bedfordshire and Warwickshire.
Councillor Ken Dawes, chair of the Tyne and Wear Pension Fund committee, said: “The launch of our partnership’s first index fund was a real collaborative effort, and demonstrates how Border to Coast delivers on the ambitions of pooling… This is a cost-effective solution which complements our existing pooled equity funds.”
Jo Kempton, head of the Lincolnshire Pension Fund, added: “This isn’t just passive exposure to an index, it brings the best of active management together with the cost-effectiveness of index investing to provide a sophisticated solution that we wouldn’t have necessarily had access to prior to our partnership.”
The multi-factor fund is the eighth listed equity fund launched by Border to Coast, and the 19th strategy overall.
