Is yours a capital plot?

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Strathclyde slashes equities in shift to ‘enhanced yield’ strategies

first_imgLong-term enhanced yield allocations would increase by 2.5 percentage points, also to 15%, with credit up to 5% from 3%.Over the next three years, the fund is recommended to shave another 10 percentage points off equity, splitting this evenly between the short and long-term enhanced yield strategies – taking allocations to 20% each.The two remaining alternative strategies see further reductions in equity holdings following the same pattern.#*#*Show Fullscreen*#*# The Strathclyde Pension Fund may radically reduce its equity holdings for a more diversified portfolio with allocations to short and long-term “enhanced yield” strategies.The UK’s largest local government pension scheme (LGPS) at £14.9bn (€19bn) currently holds over 70% of its assets in equities, with Glasgow City Council’s pensions committee now considering a range of alternative strategies to improve downside risk, produce a more efficient strategy and improve confidence in reaching the funding target.Trustees to the scheme are considering four alternative strategies, all of which see a dramatic reduction in equities in favour of credit and a range of options including absolute return, high-yield and hedge funds.The first alternative strategy, which the fund could implement immediately, would see equities fall by ten percentage points to 62.5% with short-term enhanced yield allocations doubling to 15%. Source: Strathclyde Pension Fund / Glasgow City CouncilStrathclyde Pension Fund asset allocationAt the scheme’s meeting in March, the board concluded equity exposure needed to reduce to diversify strategy.“Implementation should begin at an early date and should be progressed as quickly as opportunities, market conditions and other practicalities allow,” Lynn Brown, the fund’s deputy chief executive and executive director of financial services, told the committee in documents prepared for a recent meeting.“Processes to facilitate implementation should be considered with a strategy for ongoing risk management thereafter should be developed,” she added.Both alternative strategies would see the fund dramatically increase exposures to hedge funds, absolute return strategies, real estate debt, direct lending, non-sterling and emerging market bonds, property, social housing, infrastructure debt and equity and farmland.If accepted, these asset classes could count for 40% of the fund by 2018.The board also threw support behind Strathclyde’s £100m New Opportunities Portfolio (NOP) suggesting cap restrictions should be raised.The NOP is Strathcylde’s portfolio focusing small amounts in infrastructure, finance and alternatives.In December the fund added commitments to social infrastructure, credit for property developers and renewable energy.The board said it was too early to judge investment performance but the NOP was a success for governance and diversification – suggesting the implementation model used could be mirrored in Strathclyde’s new asset allocation shift.“The NOP itself could either continue to expand as a separate strand of investment strategy or simply be allocated across the new asset categories,” the fund said.It was also recommended the 3% allocation cap be lifted to 5% to allow headroom, given it has investment commitments of £300m, with £150m spare capacity.The fund achieved an 8.8% investment return over 2014, above its 8% benchmark.last_img read more

Wednesday people roundup

first_imgSpence Johnson – Will Mayne has been promoted to director. He studied Economics at the University of Cambridge and management at the Judge Business School before running a team of analysts at Informa. Since joining Spence Johnson, he has worked on a wide variety of strategic projects across European institutional.Newton Investment Management – Julian Lyne has been appointed global head of distribution. He was previously head of business development and global consultant relationships at Newton. He joined the company in the summer of 2014 from F&C Investments, where he was head of institutional business.BNY Mellon – Richard Gill has been appointed head of BNY’s Markets business in the EMEA region. Gill has worked at BNY Mellon for more than 20, years and his previous roles include co-head of FX Trading and chief FX Dealer. Meanwhile, Ileana Sodani is to lead the Asset Servicing Relationship Development business in the EMEA. She formerly held the position of chief relationship officer of Pershing’s EMEA business.bfinance – Peter Hobbs is joining as managing director of private markets. Hobbs recently left MSCI, where he was head of real estate research. Hobbs was previously head of global research at Deutsche Bank’s real estate investment management business RREEF, before joining MSCI in 2010.UBS Asset Management – Asher Garnett has joined as director of UK business development for the global real estate business of UBS. Garnett joins from BlackRock, where he spent the past five years. Prior to this, he spent four years on CMBS at Bank of America. Pension Protection Fund, West Midlands Pension Fund, Financial Conduct Authority, Redington, Willis Towers Watson, Spence Johnson, Newton Investment Management, BNY Mellon, bfinance, UBS Asset ManagementPension Protection Fund – Leanne Clements has joined the UK’s PPF as responsible investment manager. Clements was most recently responsible investment officer at West Midlands Pension Fund. She held a similar position at the London Pensions Fund Authority and has also worked at Pensions and Investment Research Consultants (PIRC), a proxy voting and engagement firm. Ebba Schmidt, who was the responsible investment manager at the PPF and implemented its responsible investment strategy, died last year.Financial Conduct Authority (FCA) – Acting chief executive Tracey McDermott is to leave the FCA on 1 July. In January, she decided in early December 2015 to withdraw from the process to appoint the permanent chief executive but would continue as acting CEO until a permanent replacement was in post. Andrew Bailey was appointed as the new chief executive on 26 January and is due to take up the position this summer.Redington – Jinesh Patel has been appointed vice-president of the DC & Financial Well-being Consulting Practice. He joins from Willis Towers Watson, where he provided defined contribution consultancy advice. Before then, he worked at HSBC.last_img read more