Strathclyde allocates £620m to infra, real estate mandates

The Glasgow-based Strathclyde Pension Fund has allocated £820m (€933bn) to a range of infrastructure, absolute return and real estate debt funds as it continues to implement its new investment strategy.

The investment committee for the £20.8bn UK public sector pension fund approved investments of £200m in the Ruffer Absolute Return Fund and £500m in the JP Morgan International Infrastructure Fund at a meeting last month.

In addition, the panel gave the go-ahead for a £50m investment in Equitix Fund V – a fund investing in small and mid-market core infrastructure and energy efficiency assets in the UK – and a £50m investment in Greencoat Solar II Fund, which targets UK ground-mounted solar photo voltaic farms.

The committee also approved a £20m investment in GAM Real Estate Finance Fund II – a fund of domestic commercial real estate loans.

These new investments are part of the pension fund’s ongoing diversification process, which involves reducing its equities exposure and building up allocations to private debt, emerging market debt, global credit and UK infrastructure.

The shift is aimed at rebalancing the portfolio towards the pension fund’s short-term and long-term enhanced yield allocations.

In March, the Strathclyde Pension Fund announced it had sold 10% of its equity exposure in December 2017 – cutting more than £1bn from a passive equity mandate run by Legal & General Investment Management – and bringing its equity weighting down to 57.5%.

Strathclyde is about to start tender exercises to identify suitable managers for new investment allocations to private debt and real estate debt, with the mandates to be announced towards the end of this year.

The pension fund also said it had made a 1.8% investment loss for the quarter ending 31 March 2018, with a return for the financial year of 6%.

With a value of £20.8bn at the end of March, the fund’s estimated funding level was 105.6%, it said.

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