PPF to bring investments in-house as it refines strategy

The lifeboat scheme last week released its strategic plan for the period 2015-18, including predictions the number of members in the PPF would rise to 300,000 by 2018 from 200,000, and assets under management would rise to £25bn from £20bn.

A spokesperson for the PPF said: “Over the course of the next three years we will be developing our asset management model and looking at changes that give the organisation greater control over assets, increase cost-effectiveness for the benefit of our members and levy-payers.

"We will look at the merits of bringing elements of assets in-house, as opposed to doing everything through asset management partners.”

We will look at the merits of bringing elements of assets in-house, as opposed to doing everything through asset management partners

Pension Protection Fund

In addition, Lothian Pension Fund this week said it has created an in-house global equity portfolio to sit alongside existing internal high-dividend and low-volatility portfolios.

John Finch, director of investment consulting at consultancy JLT Employee Benefits, said it was not uncommon for local authority schemes to run passive portfolios in-house.

“The challenge is if you want more active management and you start to go to other areas, are the resources there to do it?,” he said.

Finch added around a decade ago there was a trend towards outsourcing more aspects of scheme management, but improved processes have reversed this.

"What was quite labour intensive is now quite easy," he said.

In-house services can be cheaper than external managers and it is not uncommon for large schemes to set in-house management teams. 

However Gavin Orpin, partner at consultancy LCP, said most of its clients would find this "impossible" to do due to their size.

“It’s realistic and cost effective when you’re talking about schemes in the tens of billions, but less than that you struggle to find the calibre of individual [to manage the assets].”