Pension Fund Committee 04 December 2020
Item 5
LGPS CENTRAL POOLING UPDATE
Introduction
1. This report continues the series of updates requested by Committee on progresstowards delivering investment pooling. It summarises the main activity since the lastupdate presented in September.
Recommendation
2. The Committee is asked to note the position as set out in the report.
LGPS Central Joint Committee
3. The LGPS Central Joint Committee is a public forum for the Councils within theLGPS Central Pool (the Pool) to provide oversight of the delivery of the objectives ofthe Pool, the delivery of client service, the delivery against the LGPS Centralbusiness case and to deal with common investor issues.
4. The Joint Committee provides assistance, guidance and recommendations to theindividual Councils in connection with specific pooling functions taking intoconsideration the conflicting demands and interests of the participants within thePool. The Joint Committee does not have delegated authority to make bindingdecisions on behalf of the participating Councils.
5. The Joint Committee is a public meeting and Cheshire West and Chester Councilact as clerk to the Joint Committee.
6. The Joint Committee usually meets twice yearly in spring and autumn. The spring2020 meeting was cancelled due to the impact of Covid-19 at that time. The autumn2020 meeting was held on 20 November. The meeting was held successfully viaMS Teams with a live webcast available for public viewing
7. The roles of chair and vice chair rotate annually between partner funds. Given thecancellation of the spring 2020 meeting, the November meeting elected CouncillorBiggins from Shropshire as Chair and Councillor Hogg as Vice Chair for the comingyear.
8. Members of the public can submit written questions to the Joint Committee. For theNovember meeting seventeen questions were received. Recognising that the springmeeting was cancelled Joint Committee exercised discretion, for one occasion only,to extend the usual fifteen-minute time allocation for responding to public questions.The questions and responses will be published.
9. The Joint Committee received a report on the work of the Practitioner AdvisoryForum, the officer working group which supports the Joint Committee and theShareholder Forum in the delivery of pooling. Key activity included
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Pension Fund Committee 04 December 2020
Item 5
Client related activity
• Scrutiny of investment performance of pooled investment funds.
• Pooled product launches and new product development.
• Approval of key performance indicators for 2020-21.
Shareholder related activity
• Reviewing the outturn forecasts provided by the Company.
• Discussions with the Company regarding future office accommodation as thelease on current accommodation comes to an end in spring 2021.
10. The updated pooling risk register was also reviewed. The risk register reflects therisks to the Investment Pool in its widest definition rather than individual PartnerFunds or the Company.
11. The final item on the Joint Committee agenda was a presentation from LGPSCentral Ltd providing an update on the company and information on theperformance of each of its pooled investment funds.
12. The Joint Committee papers are publicly available on the Fund’s website at
https://www.cheshirepensionfund.org/members/wp-content/uploads/sites/2/2020/11/Joint-Committee-Papers.pdf
Investment performance
13. The Fund is invested in three investment products provided by the company, theClimate Factor Fund, the Global Active Equity Fund and the Private Equity 2019vintage. Performance of the two pooled funds and the Private Equity partnership isincluded in the regular reporting presented to Investment Sub-Committee.
14. Extracts from the company presentation to Joint Committee on the performance ofthe investment products that the Cheshire Fund is invested in are attached inAppendix A for Committee’s information.
15. As previously reported, the Global Active Equity Fund is below target but by adecreasing margin as more recent performance begins to recover the initial bumpystart of this fund. The Climate Factor Fund continues to meet its index trackingbenchmark whilst also making positive contributions to climate outcomes by havingan improved climate footprint.
Asset transition
16. There was no scheduled further transfer of Fund assets into the pool since the lastreport to Committee.
17. Following the decision of this Committee to invest in the pooled Emerging MarketDebt Fund, officers are working with the company and other investee partner fundsto secure a smooth transition of assets in the coming weeks.
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18. It had been planned to present the business case for the Fund’s investment in thenew pooled Multi Asset Credit Fund to this meeting. However, the company has notyet finalised the procurement of managers for this fund. Hence that investment casewill now be presented to a future meeting, most likely March 2021.
19. Discussions continue about launching pooled funds for infrastructure and directproperty, with company targeting these for launch by spring 2021.
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Pension Fund Committee 04 December 2020
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Classified as Confidential
1LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
Joint Committee Meeting
Originally Presented 20th November 2020
Extract from LGPS Central Limited Update
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Classified as Confidential
LGPS Central All World Passive Equity Climate MF Fund
2LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
-15
-10
-5
0
5
10
15
Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20Perf
orm
ance
(%
)
LGPS CENTRAL FUND BENCHMARK
Source: LGPS Central LimitedPage 56 of 112
Classified as Confidential
LGPS Central All World Passive Equity Climate MF Fund
3LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
FUND(ACS-PASSIVE)
INCEPTION DATE
TOTAL POOLED ASSETS UNDER MANAGEMENT
PERFORMANCE SINCE
INCEPTION(%)
BENCHMARKSINCE
INCEPTION (%)
TRACKING ERROR
(%)
RELATIVEVs.
BENCHMARK(%)
WITHINTARGET?
LGPS Central All World Passive Equity Climate Multi Factor Fund
Oct-2019 £2,274m +9.60 +9.46 0.10 +0.14 Yes
INVESTORS (2) AMOUNT (£m)
West Midlands 1,713
Cheshire 561 Key Performance
Indicator
Highlights & Outlook
• Fund is meeting its tracking error target• Small outperformance versus index since launch in October
2019• 44% reduction in carbon emissions and 79% reduction in fossil
fuel reserves versus FTSE All World index• Fund also has exposure to five style factors including “quality”
Source: LGPS Central Limited
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4LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
FTSE AW Climate Balanced Comprehensive Factor
* Source: FTSE
Climate Characteristics – 12 months to 30 September 2020 versus FTSE All World
3328
698
0500
100015002000250030003500
FTSE All World FTSE AW ClimateBalanced
Comprehensive
Met
ric
To
ns
per
m$
Eq
uit
yFossil Fuel Reserves 79% lower
Reserves
255
142
0
50
100
150
200
250
300
FTSE All World FTSE AW ClimateBalanced ComprehensiveM
etri
c T
on
s/$
m R
even
ue
Carbon Emissions Intensity
44% lower Carbon Emissions 173
122
0
50
100
150
200
FTSE All World FTSE AW ClimateBalanced
Comprehensive
Met
ric
To
ns/
$m
Rev
enu
e
Weighted Average Carbon Emissions Intensity
29% lower WA Carbon Emissions
2.38
3.36
00.5
11.5
22.5
33.5
4
FTSE All World FTSE AW ClimateBalanced Comprehensive
Pro
po
rtio
n o
f to
tal r
even
ue
%
Green Revenues 41% higher Green
Revenues
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Classified as Confidential
LGPS Central Global Equity Active MM Fund
5LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
-10
-5
0
5
10
15
20
Perf
orm
ance
(%
)
LGPS CENTRAL FUND TARGET
Source: LGPS Central LimitedPage 59 of 112
Classified as Confidential
LGPS Central Global Equity Active MM Fund
6LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
FUND(ACS-ACTIVE)
INCEPTION DATE
TOTAL POOLED ASSETS UNDER MANAGEMENT
PERFORMANCE SINCE
INCEPTION(%)
BENCHMARKSINCE
INCEPTION (%)
TARGETSINCE
INCEPTION(%)
RELATIVEVs.
BENCHMARK(%)
RELATIVEVs.
TARGET(%)
LGPS Central Global Equity Active Multi Manager Fund
Mar-2019 £2,443m +10.17 +11.72 +13.22 -1.55 -3.05
INVESTORS (6) AMOUNT (£m)
West Midlands 902
Staffordshire 576
Leicestershire 387
Cheshire 285
Shropshire 271
Nottinghamshire 22
Key Performance
Indicator
Highlights & Outlook
• “Growth” companies significantly outperforming “value”, which hasnegatively impacted fund performance
• Changed weightings away from “value” manager to “growth” managers• Schroders and Union outperformed their performance objective for the 12
month period to end September 2020• The Fund’s carbon footprint is 33% below that of the index, and over 4oo
engagements undertaken by our stewardship partners in the past 12 months• Since September, performance has improved. Confidence in a market
recovery has risen following the US election and the Covid-19 vaccineannouncement
Source: LGPS Central Limited
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Classified as Confidential
7LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
LGPS Central PE Primary Partnership 2018 LP
Investments
*All figures as at 30th June 2020
Source: LGPS Central Limited
Fund Size: £150mCommitted & Reserved: £150m (100%)
Called to 30th June 2020: 14.2%Called to date: 26.6%
* Includes reserve for management fee where such fees are outside of the commitment amount
FUND COMMITMENT DATE
GEOGRAPHY/ REGION
STRATEGY COMMITMENT AMOUNT*
(GBP EQUIVALENT)
STATUS NUMBER OF UNDERLYING COMPANIES
FUND CAPITAL CALLED
(GBP EQUIVALENT)
Baring Private Equity Asia Fund VII February 2019 Asia Mid-Large Buyouts £30.5m Investing 9 ~32%
KKR Europe V April 2019 Europe Mid-Large Buyouts £31.7m Investing 6 ~20%
Blackstone Capital Partners VIII May 2019 Global Mega Buyouts £31.5m Investing Nil Nil
Permira VIII June 2019 GlobalGrowth Mega
Buyouts£30.6m Investing 4 ~17%
Madison Dearborn VIII October 2019 USA Growth Buyouts £26.0m Investing 1 Nil
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Classified as Confidential
8LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: 10425159. Registered
Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
LGPS Central PE Co-Investment Partnership 2018 LP
Investments
*All figures as at 30th June 2020
Source: LGPS Central Limited
Fund Size: £107mInvested, Committed & Reserved: £107m (100%)
Called to 30th June 2020: 88.9%Called to date: 90.8%
FUND COMMITMENT DATE
GEOGRAPHY/ REGION
SECTOR INDUSTRY COMMITMENT AMOUNT
(GBP EQUIVALENT)
CAPITAL CALLED
(GBP EQUIVALENT)
GFL Environmental April 2019 North AmericaWaste / Business
ServicesWaste Removal
& Disposal£20.7m £20.5m
Transporeon April 2019 Europe SoftwareSoftware for Road Freight Operators
£15.0m £15.0m
IVC Group June 2019 Europe Medical ServicesVeterinary Care
£20.7m £20.7m
Acuon CapitalSeptember
2019Asia Financial Services
Savings bank and alternative lender
£20.5m £20.2m
EyeCare Partners January 2020 USA Medical ServicesOphthalmology & Optometry Care
£24.2m £18.6m
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This document has been produced by LGPS Central Limited and is intended solely for information purposes.Any opinions, forecasts or estimates herein constitute a judgement, as at the date of this report, that is subjectto change without notice. It does not constitute an offer or an invitation by or on behalf of LGPS Central Limited to any person to buy or sell any security. Any reference to past performance is not a guide to the future.The information and analysis contained in this publication have been compiled or arrived at from sourcesbelieved to be reliable, but LGPS Central Limited does not make any representation as to their accuracy orcompleteness and does not accept any liability from loss arising from the use thereof. The opinions andconclusions expressed in this document are solely those of the author.
This document may not be produced, either in whole or part, without the written permission of LGPS CentralLimited.
All information is prepared as of 06.11.2020.
This document is intended for PROFESSIONAL CLIENTS only.
LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in EnglandRegistered No: 10425159. Registered Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB
DISCLAIMER
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