UK – Strathclyde Pension Fund has appointed three asset managers to a passive fundamental equity framework agreement, seeding one of the managers with a portfolio worth half a billion pounds.

The initial tender from October last year came after the £13bn (€15bn) local authority pension scheme (LGPS) decided on an initial 5% allocation to fundamental indexation in a further development of its passive management strategy.

The scheme received applications from 17 asset managers, eventually shortlisting BlackRock, Goldman Sachs Asset Management, HSBC Global Asset Management, Legal & General Investment Management (LGIM), Northern Trust and State Street Global Advisors (SSgA).

Following interviews with Strathclyde's investment advisory panel, HSBC, SSgA and LGIM were appointed to the framework, with LGIM asked to manage the £550m portfolio.

LGIM is already responsible for a substantial amount of Strathclyde's assets – at the end of March managing £5.6bn, or more than 43%, of its total assets under management in a passive multi-asset strategy.

The manager returned 17.8% over the 12 months to March, above its benchmark target and only beaten by Henderson, JP Morgan and Partners Group – the latter responsible for the fund's 21.7% returns on its private equity investments, outperforming its benchmark by 4.9 percentage points.

Strathclyde saw an overall annual return of 14.5%, well above its three-year average return of 7.6%.

However, as administering authority Glasgow City Council said last October that it designed the framework to be accessed by all of Scotland's local authority funds, HSBC and SSgA may yet see expressions of interest from the country's other schemes.

Commenting on Strathclyde's decision to open the framework up to other LGPS, a spokesman said: "There has been growing enthusiasm in recent years to have funds work together or share resources where possible.

"In that spirit, we also decided to make it open – although this framework was something we were already planning, and we still did it absolutely on our own terms."

He added that there had been a "strong response" from other funds to date.

A number of framework agreements open to other schemes have been launched in the recent past, such as efforts led by the Norfolk County Council for a national investment consultancy framework.

However, regional attempts have also been tried by a number of funds, notably the Environment Agency's joint tender with five other local government funds in the South West of England.