LGPS Central, the asset pooling vehicle for nine UK local authority pension funds, has launched a multi-factor equity fund with a climate tilt.
It brings together £2.1bn (€2.3bn) of assets from two of the pool’s local government pension scheme (LGPS) funds, with West Midlands Pension Fund and Cheshire Pension Fund the initial investors.
The fund tracks the FTSE All-World Climate Balanced Comprehensive Factor Index and is designed to take into account “the risks and opportunities associated with climate change” while pursuing long-term superior investment returns.
It is tilted away from companies with greater carbon emissions and the most carbon-intensive fossil fuel reserves, and favours those with revenues from environmentally-friendly products and/or services.
Mike Weston, chief executive of LGPS Central, said: “The LGPS Central pool is fully aware of the risks and challenges that climate change poses – not only for the planet but also for investment returns – and our new fund enables us to align our shared sustainable investment ethos with our long-term investment goals.”
The new sub fund, which is the pool’s seventh, will be managed in-house. LGPS Central’s partner pension funds have around £45bn in assets under management between them.