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Avon Pension Fund hires Loomis, Ruffer in £700m diversification shift

Avon Pension Fund has shifted more than 15% of its portfolio into two multi-asset funds, scaling back holdings in traditional equity and fixed income funds.

The £4.6bn (€5.2bn) local authority scheme has allocated £485m to Loomis Sayles to run a multi-asset credit mandate, and £226m to UK boutique Ruffer’s diversified growth fund.

To fund the new allocations, the scheme raised £165m from selling out of regional passive equity funds for Europe and Asia Pacific, run by State Street Global Advisors, according to council documents.

During the third quarter of 2017, Avon also took roughly £60m each from an emerging markets fund managed by Unigestion and a UK equity fund run by TT International, and £132m from a fixed income mandate run by Royal London Asset Management.

In a statement announcing its appointment, Loomis Sayles said its “World Credit Asset” strategy included global investment grade and high yield credit, bank loans, securitised debt and emerging market debt.

Chris Yiannakou, managing director at Loomis Sayles, added: “We already have a strong track record of working in partnership with local government pension schemes [LGPS] in the UK and we are very much looking forward to continuing this with the Avon Pension Fund.”

In its 2016-17 annual report, Avon said its investment portfolio gained 17.2%.

Avon is one of 10 LGPS funds in the Brunel Pension Partnership, one of eight asset pools established by UK local authority funds and due to open for business by 1 April next year.

Ruffer has been a significant beneficiary of LGPS pooling, having been awarded a diversified growth fund mandate by the London CIV. As of 31 March it ran more than £400m on behalf of five of London’s LGPS funds through the CIV pool.

Avon Pension Fund’s asset allocation (30 September 2017)

Avon Pension Fund's asset allocation, 30 September 2017

Source: Avon Pension Fund

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