Investment

The London Pensions Fund Authority has assets under management at 31 March 2017 of £5.3 billion.  

Our overarching fiduciary duty is to ensure we have the money available to pay all the benefits as they fall due. Our duty is to make investments where we see the best return for our stakeholders, however, we aim to do so responsibly. 


LPFA’s responsible investment approach is set out in our Statement of Investment Principles. Our objective is to use our influence as a large institutional investor to encourage responsible long-term behaviour in the companies in which we invest and through the voting mandates we give to our fund managers.

As a local authority pension fund LPFA is a member of the LAPFF (Local Authority Pension Fund Forum) collaborative group and has adopted the LAPFF’s major Policy Guidelines. We have asked our fund managers to vote consistently with these guidelines and engage with the investee companies whenever possible.

The LPFA Board comprises individuals with expertise in public service, commerce, audit, pension and fund management and our governance structure ensures that we understand our liabilities and make investments which provide the appropriate risk return trade-off.  In addition we continue to build our in-house Investment Team, developing a quantitative approach to maximise returns and an asset and liability management platform, as well as exploring new investment opportunities and innovative investment techniques.

We report formally each year on our performance in our annual report, but each quarter on these pages we will publish an update which gives a snapshot of our latest progress.

 

Investment Strategy

The current Investment Strategy is set out in our Investment Strategy Statement. This was formally approved by the LPFA Board in October 2016.

The LPFA Board is responsible for the overall investment strategy but has delegated its power to the Investment Committee. The Investment Team is responsible for the monitoring and implementation of the investment strategy and manages the external fund managers.  

Internally Managed Concentrated Global Equity Portfolio

LPFA is continuing to develop our internal capability to manage equities. Our Board has approved the investment decision of creating a concentrated, long term focused equity investment strategy for a significant proportion of our equity investment.

You can read about our approach to equities here.                                      

You can view our portfolio here and how it is performing here.



Risk Management

LPFA manages the underlying investment risk to avoid undue losses. The primary risk faced by the Fund is that it does not have sufficient assets to meet its pension obligations as they fall due. The LPFA manages this long-term risk by conducting asset/liability studies. As a result of these studies, a long-term investment strategy has been adopted to hopefully achieve the expected rate of return and to minimise the risk of adverse outcomes.



Investment Managers

Excluding various managers for Private Equity and Infrastructure assets, LPFA currently employs 6 mainstream fund managers (>1.5% of LPFA’s AUM). These fund managers were chosen, not only because of their high quality people, processes and historic performance, but also for their diversity of styles. This diversification contributes to risk\007A control within the portfolio. Each fund manager is set a benchmark and performance objective around that benchmark.