Local authority schemes including the Environment Agency Pension Fund and Avon Pension Fund are exploring the launch of a pooled investment vehicle for their £19bn (€24.2bn) in assets.

The eight funds, all located in the South West of England, said they had been working on details of a possible collaboration since the UK’s July Budget reiterated government support for asset pooling as a means of reducing management costs.

In a statement, the funds said any approach would need to allow for sufficient flexibility “to evolve as governance or investment requirements change”.

They added: “The objective will be to achieve savings over the longer term from both lower investment management costs and more effective management of the investment assets.”

It stressed that the structure would focus on pooling the buying power of the collaborating pension funds, maintaining an individual scheme’s ability to control matters such as asset allocation.

In minutes from a September meeting of the Avon Pension Fund, the scheme said the preferred approach was for a collective investment vehicle (CIV) centrally administered by one of the councils, with all members represented through a joint board.

This would differ from the approach pursued by London’s councils, which set up a standalone corporate entity, with Hugh Grover as chief executive, to oversee its consolidation efforts.

The report to the pensions committee said a CIV approach would involve compromises, including less control over the structure of future investment mandates.

But it argued that the approach was preferable to unnamed alternatives that would “probably leave the fund at the margins”.

The eight funds – Avon, Cornwall, Devon, Dorset, the Environment Agency, Gloucestershire, Somerset and Wiltshire – have historically exchanged best practice and worked on a number of joint procurement exercises, including one in 2010 for consultancy services.

In the minutes from the Avon meeting, it was noted that the current eight members would be suited for collaboration, as no single authority would dominate.

However, it accepted that, with £19bn in assets, it fell short of the government’s wish for substantial asset pools, with previous figures setting the target at £25bn.

The announcement that the South West was looking to collaborate comes after chancellor of the Exchequer George Osborne said the pooling of local authority assets – which he said would create British Wealth Funds – would help boost future investment in domestic infrastructure.

Other efforts to pool investments include all Welsh local authority funds jointly procuring a new passive equity manager, the London CIV and collaboration between the London Pensions Fund Authority and both the Lancashire Country Pension Fund and the Greater Manchester Pension Fund