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LGPS Central names EM managers; Brunel starts global equities search

LGPS Central, one of the UK’s eight asset pools for local authority pension funds, has named a trio of managers to run a £1.5bn (€1.7bn) emerging markets portfolio.

LGM Investments (a subsidiary of BMO Global Asset Management), UBS Asset Management and Vontobel Asset Management will each run a third of the assets of the Emerging Markets Equity Active Multi-Manager fund when it launches later this year, the pool said in a statement.

Several other managers currently run emerging market portfolios for LGPS Central’s local authority clients, and are therefore set to lose mandates as the schemes begin transferring assets to the pool.

These include Schroders and JP Morgan Asset Management – which ran more than £150m each for the Worcestershire Pension Fund as of 31 March 2018 – and Russell Investments, which ran £122m for the Staffordshire Pension Fund, according to the scheme’s latest annual report. In addition, Macquarie had a £177.5m emerging markets equity mandate with the Leicestershire Pension Fund at the end of March last year.

The fund launch follows LGPS Central’s launch of a £2bn global active equity fund last year, run by Harris Associates, Schroders and Union Investment.

The pool also launched a search for investment grade corporate bond managers late last year, with the fund expected to attract a similar amount from LGPS Central’s nine local authority schemes across the Midlands region of England.

Jason Fletcher, chief investment officer at LGPS Central, said: “We look forward to building a long-term working partnership with [the managers] so that we can deliver our partner funds’ investment objectives effectively.”

LGPS Central aims to pool roughly £44bn of assets from its nine member funds, saving roughly £250m over the course of its first 15 years of operation. It has already taken on more than £14bn in assets under management and advice.

Brunel launches global high alpha equities search

Separately, the Brunel Pension Partnership – which is pooling the assets of 10 local authority pension funds from south and south-west England – has begun its process for launching a high-alpha global equities fund.

In the first stage, launched today, it has requested that managers send in “strategic research and thought pieces that contribute to the debate on delivering excellent performance in global equities”. It does not want proposals or strategy presentations.

A formal search process for managers to run the portfolio – estimated to be worth roughly £2bn – will start in March, and managers can register for updates through Brunel’s website . The fund is slated for launch in the fourth quarter of 2019.

Mark Mansley, Brunel’s CIO, said: “Put simply, we are seeking the best global equity fund managers in the world. We expect to spread the portfolio between four or five managers with diverse and complementary approaches.

“The individual mandates will be fairly unconstrained, but will be long only. We will generally be looking for a long-term approach, innovation and originality in managers’ processes, and high return expectations of 3% or more over benchmark.”

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