The eight Welsh local government pension scheme (LGPS) members have hired asset manager BlackRock for a £2.8 billion passive mandate.
Currently, three different investment managers handle these passive assets and moving to a single manager will reduce costs. BlackRock’s appointment came after a comprehensive procurement exercise and manager search, and a spokesman for the Welsh funds commented: “We were impressed by the breadth, depth and quality of the bids submitted, as well as the attention paid by bidders to proposing solutions to meet the specific circumstances of the Welsh funds. Our search was open to any potential provider who wished to submit a proposal and we believe that this helped to support an extremely competitive process, which was also reflected in terms of pricing.”
Aon Hewitt advised on the procurement and search and its head of public sector investment consulting, Dave Lyons, said: “In addition to the quality and sustainability of the bids received, the Welsh funds were able to achieve considerable cost savings through undertaking this ground-breaking exercise, which will compound up over the long term to deliver many millions of pounds of additional value to them.” BlackRock head of UK local authorities, Christopher Head, commented: “We are excited about working with the Welsh schemes to provide high quality, cost effective access to the broadest range of market opportunities. We are confident we will be a strong partner for the long term as the funds look to meet their liabilities for Welsh pension fund members in the future.”
The eight Welsh LGPS funds have combined assets of £11 billion, well below the £25 billion asset pool required under the LGPS asset pooling reform process, but it is understood that the Welsh funds will be allowed to operate a single asset pool for political reasons.