mast image

Impact Investing

IPE special report May 2018

Sections

BTPS equity exit not a bearish signal - Hermes

UK - The BT Pension Fund's ditching of about a third of its £9.7bn (€14.3bn) UK equity portfolio in favour of alternative investments is "not a bearish signal", according to fund manager Hermes.

The £36bn scheme, the UK's largest, created headlines this weekend when the news broke. It's seen as one of the biggest single shifts away from the London stock market by a UK pension fund.

The Financial Times quoted consultants saying that it could have a "snowball effect", prompting a further acceleration away from equities in a climate where UK pension funds have reduced their exposure to equities over the past decade.

Also an equity strategist at Morgan Stanley was quoted as saying that this was "not good news for markets".

Nick Denton, spokesman for BTPS-owned manager Hermes refuted this, saying: "This is not a bearish signal from our side." It is not a sign that pension funds should now move away from equity he added.

According to Denton it is just a matter of diversification, and "the fund will still have a large chunk of 19% in UK equity". Also he argued that there are other pension funds that in fact want to increase their equity portfolio, hence keeping the balance.

Lead by Hermes, the fund will place the assets worth about £3bn with alternative assets such as hedge funds, private equity and commodities. Also £370m will be invested in infrastructure projects according to Hermes.

The switch, organised by recently appointed Hermes chief executive Mark Anson, is to protect the fund against long-term inflation Anson told the FT.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

  • RE-2441

    Closing date: 2018-05-31.

Begin Your Search Here