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London CIV adds multi-asset, researches equity, fixed income mandates

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The London CIV is to launch a multi-asset sub-fund in December ahead of a range of UK and global equity mandates in the next few months.

The local government pension scheme (LGPS) pool has also begun research into fixed income mandates, according to announcements posted on its website yesterday.

Newton Investment Management will run the multi-asset sub-fund, which will be a version of its £9.8bn (€11.5bn) Real Return fund.

It will launch on 16 December, and initial investments will bring the pool’s assets to £3bn by Christmas, according to chief executive Hugh Grover.

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Newton is also set to run a global equity fund to be launched in the New Year, while Majedie Asset Management will run the CIV’s first UK equity fund, also to be launched in early 2017.

Grover said he was “optimistic” of launching a fourth global equity fund, run by London-based boutique Longview Partners, in the near future.

On top of these launches, CIO Julian Pendock and the CIV’s investment team have been assessing more than 200 submissions for other global equity mandates, Grover added.

Up to nine managers are in talks about launching equity sub-funds later in 2017 as a result of the assessment process, including companies with emerging market or sustainability tilts, as well as “early stage” managers.

In an announcement on its website, the London CIV said: “We anticipate being in a position to offer new dedicated global equity strategies for three products in the first half of 2017, with further strategies being opened in the autumn and winter as demand arises.

“The strategies will offer [pensions] greater choice and the opportunity to diversify further should they choose to do so.”

The CIV’s investment team fixed income research is planned to dovetail with triennial valuations for LGPS funds and subsequent asset allocation and strategy reviews.

The CIV said: “We have held a number of meetings over the last few months encouraging investment managers to take a more holistic approach to income generation as funds become increasingly more mature and pension fund cashflows turn negative.”

The London CIV is designed to pool assets across the UK capital’s 33 public pension funds.

In almost exactly a year since the launch of the first sub-fund – a global equity mandate run by Allianz Global Investors – a further four equity and multi-asset sub-funds have been launched.

Finally, Grover said he and the CIV’s investment advisory committee would be “advocating for change” as the Financial Conduct Authority seeks to implement Mifid II.

Under the current wording, local authorities are to be reclassified as “retail investors”, which would significantly restrict the range of investments they could use.

Grover said he would lobby for LGPS funds to remain as professional investors “as the proposed criteria don’t work”.

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