A more than £600m (€711m) reallocation of assets from equities to alternatives by the £25bn pension fund for the Royal Bank of Scotland Group has seen mandates by two asset managers terminated.

In its annual report, covering the financial year to 31 March, the RBS Group Pension Fund said it reduced its equity investments to £8.6bn, increasing real estate and alternatives holdings, such as infrastructure.

It fund said it outperformed its strategic benchmark by 0.9 percentage points over the course of the year, returning 13.8%, and outperformed its three-year target by 1.3 percentage points, achieving a result of 12.2%,

It terminated a £377m global equity mandate held by Lazard Asset Management and a £238m mandate overseen by Davis Funds, while in its smaller, £766m section it invested £13m in infrastructure equities and £6m with Nephila Capital, a specialist manager investing in insurance-linked securities and reinsurance risk.

A more sizable infrastructure portfolio of £120m was also awarded by the main scheme to Hastings Funds Management, and Legal & General Investment Management (LGIM) – already responsible for more than £10bn of RBS Group Pension Fund’s assets – won a £17m forestry mandate.

LGIM also won a further £145m global credit mandate, doubling the size of credit investments while terminating the £82m mandate held by Standard Life.

The manager saw a liability hedging and cash mandate previously overseen my BlackRock split in two – between a £380m liability hedging and a £132m cash and liquidity portfolio.

In the report, the fund noted that its continued diversification into alternatives allowed “a reduced concentration of risk in equities”.

“The purpose of this diversification is to give the fund a more balanced portfolio, which should generate more consistent returns based on a broader range of assets,” it said.

It also saw property investments increase by £200m to £1bn, largely granted to a £393m UK property mandate overseen by Standard Life.

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