The UK’s £22.6bn (€30.9bn) Pension Protection Fund (PPF) has begun building its in-house management team, hiring a senior member of the Aviva Staff Pension Scheme as its inaugural head of liability driven investment (LDI).
Trevor Welsh will join in October, leaving the Aviva fund after three years as its head of UK sovereign and LDI.
Welsh’s position as head of LDI at the lifeboat fund will likely see him oversee its new hybrid asset portfolio, aimed as a liability matching portfolio and set to grow to £3bn, or 12.5% of assets, by 2017.
As part of the portfolio’s growth, the PPF this week appointed Pramerica Investment Management to a £400m direct lending mandate that would see the manager offer inflation-linked loans to firms.
Before joining the insurer’s pension fund in 2012, Welsh spent 17 years at Aviva Investors, and a further 14 years at UBS, where he was the Swiss bank’s head of fixed income futures.
He will report to the PPF’s CIO Barry Kenneth, who said the hire would allow the fund to exert greater influence over asset allocation as it began bringing investments in-house.
“Taking in-house part of our LDI is a key step in updating our investment model and crucial in helping us meet our funding target and future aspirations,” Kenneth said.
He added: “Trevor’s expertise in LDI will be invaluable to our development and I very much look forward to working together.”
For his part, Welsh said joining the PPF as it began to insource investments was “hugely exciting”.
Kenneth previously told IPE that control, rather than management cost, was the driving factor behind its decision to bring management of some of its portfolio in-house.
“We know our framework better than anyone else, so, by definition, we should be able to manage it, knowing everything else within the fund, and do so in a more controlled fashion,” he said at the time.
During his time at the £14bn Aviva pension fund, Welsh would have helped broker a £5bn longevity swap, at the time the largest ever completed.
For more from Barry Kenneth on the PPF’s investment strategy, see the upcoming September issue of IPE