A £16bn (€18bn) collaboration between three UK public sector pension schemes has launched a pooled vehicle for hedge funds.

The Local Pensions Partnership (LPP) – formed in 2015 as a collaboration between the London Pensions Fund Authority (LPFA) and Lancashire County Council’s pension scheme – today announced it had established the LPPI Diversifying Strategies fund, pooling together £750m of assets.

The multi-manager, multi-strategy fund was designed to “exploit a broad range of relative value and macro directional opportunities in global capital markets”, LPP said.

Susan Martin, LPP chief executive, said: “With LPP’s scale, we are able to access different and niche investment strategies that are often closed to new investors, providing innovative, practical implementation solutions for our clients.” 

LPP also plans to launch a pooled vehicle for property in the next few months, according to documents seen by IPE. According to their latest annual reports, LPP’s three underlying pension fund clients – LPFA, Lancashire and Berkshire – had roughly £1.5bn of property assets between them.

Berkshire joins

Separately, LPP staff have begun transferring the Berkshire Pension Fund’s £2bn investment portfolio onto its investment platform.

Berkshire became LPP’s third client last year, in line with the UK government’s push for asset pooling within the local government pension scheme (LGPS).

As part of the transition, council documents showed Berkshire would invest £120m in LPP’s global equities portfolio. Its bonds allocation moved to LPP’s existing fixed income fund in August.

In addition, Berkshire would get its own section of LPP’s private equity vehicle. Credit and infrastructure allocations were expected to transfer in the first half of 2019.

LPP stated that any holdings deemed unsuitable for pooling would remain with Berkshire until they matured or were sold.

LPP asset split, 31 March 2018

Source: Annual reports

The asset split for LPP’s three client funds, before Berkshire’s assets were transferred