We are pleased to announce that LPPI won the LGPS Investment Strategy of the Year category at the LAPF Investments Awards, held in London last night.
This is a well-deserved acknowledgement of the investment team's professionalism and dedication to our client funds.
To provide some context for the award win, we have included some details of the award submission below.
How objectives have been set and communicated
LPPI ensures clients meet pension obligations by enhancing funding levels through strategic asset management and customised portfolios for each client, with a strong focus on pension payments. Focused on sustainable investment returns, built on three pillars:
- Scale – Allowing businesses to access a broader range of investment opportunities.
- Governance – Independent decision making and governance structures enable effective investment management.
- In-house investment and risk management – In-house investment expertise across major asset classes in both public and private markets, enabling a better understanding of clients’ liabilities and funding needs.
Implementation of the investment strategy including use of pools
LPPI’s portfolios have had a material allocation to alternatives (roughly 50%) and low exposure to traditional fixed income. Our portfolios are globally diversified and constructed with a specific focus on downside protection. In general, we tend to focus on the higher quality areas in most asset classes and seek to build portfolios that can withstand multiple downside “shock” scenarios. We also conduct deep operational due diligence on all fund allocations to further reduce downside risks.
LPPI manages eight asset class based pooling vehicles for clients, and drives collaborations with like-minded investors through strategies such as GLIL Infrastructure, seeking investment into core UK infrastructure opportunities, and The London Fund, which helps London boroughs invest in opportunities in housing, community regeneration, digital infrastructure, and clean energy in the Capital.
Measurement of strategy objectives
The first LGPS pool to publish net cost savings, LPPI has increased annual savings from £28.2m to £39.1m, through pooling and its focus on direct investment and internally-managed portfolios. This brings LPPI’s cumulative net cost savings to £113m since inception in 2016. The increase means LPPI has revised up projections and is now expecting to deliver net cost savings of more than £200m by 2025, more than £350m by 2030 and more than £500m by 2035.1
Achievement of goals against stated targets
LPPI has delivered an annualised return of 7% over the five years to 31 December 2022, outperforming the Policy Portfolio Benchmark (PPB), which is a weighted composite of all asset class benchmarks, by 100bps and exceeding the target of outperforming the PPB by 50bps.2 All clients have also outperformed their respective PPB over one-, three- and five-year periods to 31 December 2022. Clients ranked in the first, third, and fifth centiles for one-year performance in the PIRC universe of LGPS 63 funds to 31 March 2022.3
1 Source: LPPI to 31 March 2022. Forecasts are based on no less than £30m annual net cost savings.
2 Source: LPPI. Net of fees.
3 Source: PIRC Local Authority Pensions Performance Analytics Annual Review 2021-2022. Where referenced, past performance is not an indication of future results. Investments can go up as well as down.
This award submission has been prepared to inform the external media of certain information regarding Local Pensions Partnership Ltd (LPP) and its subsidiary, Local Pensions Partnership Investments Ltd (LPPI) only (together the LPP Group), subject to the following disclaimer.
LPPI is authorised and regulated by the Financial Conduct Authority. This award submission does not provide advice on legal, taxation or investment matters and should not be relied upon by any person for any purpose including (but not limited to) investment decisions.
This award submission may contain ‘forward-looking statements’ with respect to certain plans and current goals and expectations relating to LPP Group’s future financial condition, performance results, strategic initiatives and objectives. By their nature, all forward-looking statements are inherently predictive and speculative and involve known and unknown risk and uncertainty because they relate to future events and circumstances which are beyond LPP Group’s control. Any projections or opinions expressed are current as of the date hereof only and subject to this disclaimer.
This award submission and its contents is provided ‘as is’ without any representation or warranty (express or implied), and no member of the LPP Group nor any of their respective directors, officers and employees shall be held liable howsoever to any person or entity, as to the appropriateness, accuracy or completeness of the information provided herein.