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UK National Grid pension fund to offload in-house asset manager

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The National Grid UK Pension Scheme is to sell its in-house asset manager in changes to its investment and governance model.

The £17bn (€23.4bn) pension fund for the UK’s electricity network management company manages around 75% of its investments through Aerion Fund Management, wholly owned by the pension scheme and managing only its assets.

However, after the scheme reviewed its investment and governance models with the aid of consultants Redington, the trustees decided to offload the asset management business.

Aerion’s sale, preceded by the exit of chief executive Paul Sharman in March, is likely to see all of its remaining staff move with the asset manager, according to chair of trustees Nigel Stapleton.

Stapleton said the decision to sell the asset manager was not about costs or Aerion’s performance as an in-house manager.

“The trustees must focus on how they can do their own job most effectively,” he told IPE.

“Aerion is a very strong team, but the scheme is maturing, and, as you mature, you must become more risk averse.

“It is not cost or the team, but, eight years on from when we last looked at this, the scheme’s profile has changed and matured, with asset and liability management becoming more complex. We need more specialist skills.”

The pension fund will now create a small and specialist “executive team” to support the trustees with asset manager monitoring, investment strategy and liability management.

The team will report directly to the trustees, focusing on the scheme’s needs on a full-time basis.

Fenchurch Advisory, an asset manager buy-and-sell specialist, will assist with Aerion’s sale.

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