Local Pensions Partnership Investments (LPPI) has emerged as the leading contender to take on Brunel Pension Partnership’s investment infrastructure, which currently employs 75 people.
Brunel runs seven equity pooled funds, passive equity and private markets for 10 pension fund clients based in the west of England. LPPI is based in London and Preston, Lancashire, managing £26.5bn, according to its latest annual report.
The agenda for a recent Avon Pension Fund (APF) committee meeting stated: ”LPPI is likely, on the basis of initial discussions, although this is not guaranteed, to integrate the Brunel Business […] Hence, APF is hopefully able to join LPPI with peer funds from Brunel.”
APF itself is due to meet tomorrow (Friday 26 September) to select its preferred pooling partner, but it remains unclear how many of Brunel’s other clients could switch to LPPI.
In the documents, APF said that LGPS Central is “more attractive in respect of the opportunity to build flexibility required for our investment proposition and its unit costs are lower” while LPPI “on the other hand demonstrates proven ability to offer investment advice, with strength in strategic asset allocation”.
Devon, another Brunel client, has already publicly declared LPPI to be its preferred pooling partner.
Apart from APF, Buckinghamshire, Cornwall, Dorset, the Environment Agency and Somerset pension funds still have to declare their preferred pooling partner ahead of the 30 September deadline.
Wiltshire, which was the first of the 21 ‘orphaned’ funds to publicly announce its preferred pooling partner, chose LGPS Central.
Gloucestershire and Oxfordshire followed suit and also declared LGPS Central as their preferred pooling partner.
A councillor for one of Brunel’s pension funds has previously told IPE that the partner funds would prefer to all choose the same pooling partner where possible.
If the remaining Brunel funds all chose to move to LPPI, this would boost LPPI’s assets under management (AUM) by £30.3bn (€35bn).
LPPI manages £26.5bn across six funds and two pooled authorised contractual schemes (ACSs) on a fully delegated basis for Greater London, Lancashire and the Royal County of Berkshire. It employs around 450 people across its operations, which includes a dedicated pensions admin operation that oversees police and fire brigade pensions for around 600,000 workers.
A spokesperson for Brunel told IPE that pension committees have not yet all met to decide their preferred pooling partners, and therefore, it is unable to comment on potential future arrangements.
Questions over private markets
Brunel is regulated by the UK’s Financial Conduct Authority and runs seven active equity strategies, structured as ACSs, which were launched in 2018. These include: UK Equity, Low Volatility Global Equity, Emerging Markets Equity, High Alpha Global Equity, Diversifying Returns, Smaller Companies Equities, and Global Sustainable Equity.
A passive equity strategy is outsourced to Legal & General Investment Management (LGIM), and private markets are also run by external managers.
Brunel’s latest annual report showed that in the last year its AUM increased to £35.9bn, equating to 86% of client investments within the partnership pooled structure.
Listed markets account for £26.6bn in portfolios across equities and bonds, and these continue to be managed to meet clients’ investment needs.
Private markets, meanwhile, accounted for £9.6bn of total commitments across infrastructure, private equity, private debt and secured income, including property. A fourth vintage of portfolios, which has been agreed with partner funds, has deployed £4.5bn so far, with a further £3bn committed but as yet undrawn from the three prior investment cycles.
A further £2bn of property investments is also managed by Brunel on behalf of its clients.
Brunel stated that performance for the year to the end of September 2024 for its listed market portfolios was “positive in absolute terms” and all active funds except for the diversifying returns fund (RDF) enjoyed double-digit gains.
It added that performance relative to benchmarks was mixed, with the UK, emerging markets, and sterling corporate bond portfolios ahead, and the global high alpha, global small cap equities and global sustainable equities portfolios behind. The Diversifying Returns fund and multi-asset credit funds were ahead of their respective targets.
Future of the LGPS
These moves follow the UK government’s decision in April to reject proposals by ACCESS and Brunel to meet new minimum standards set out for local government pension pooling
These include a requirement for all LGPS assets to be pooled by 31 March 2026, and for local authority pension funds to take investment strategy advice from their respective pools.
This left 21 ‘orphaned’ LGPS funds looking for new partners, with final decisions required by 30 September 2025.
In early August, seven of ACCESS pool partner funds – Cambridgeshire, East Sussex, Essex, Hertfordshire, Kent, Northamptonshire and West Sussex – signalled their intent to join investment pool Border to Coast Pensions Partnership.
A few days later, the remaining four – Hampshire, Isle of Wight, Norfolk, and Suffolk – chose LGPS Central as their preferred option.
Brunel partner funds have been slower to announce their preferred pooling partner following the government’s decision.
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