LGPS pool plans to launch new ESG funds

The pool has also revealed that it requires potential new managers to provide data on cost transparency upfront.

Speaking at the Pensions and Lifetime Savings Association’s Local Authority Conference 2021, London CIV chief executive officer Mike O’Donnell said that there has been an increased focus on private market offerings and ESG funds over recent years.

London CIV offers funds in these areas including its recently launched Renewable Infrastructure Fund.  

“We are now working on a low-carbon, passive, factor-based fund and a carbon-aware version of our Global Bond Fund,” O’Donnell said. 

He also explained that the pool is currently going through a medium-term strategy reset. 

“Starting with our client investment intentions, [we are] looking at what we think that means for our strategic roadmap in terms of product and [how] that then feeds into discussion on fund structures, operating models and medium-term resource plans,” he said.

The pool is targeting to complete the reset by this year. 

Looking ahead, O’Donnell expects there to be more scope for cross-pool collaboration. At the end of last year, the London CIV launched The London Fund alongside the Local Pensions Partnership and the London Pensions Fund Authority. 

“The pools have good working relationships with each other at different levels in the organisation, but I think more can be done in terms of more formal collaboration in a number of particular areas,” he said. 

Separately, during a talk on cost transparency at the conference, London CIV’s chief investment officer, Jason Fletcher, said that when appointing new managers, the pool ensures that potential managers are willing to provide data on cost transparency upfront. 

“When we are doing the [request for proposals] for a new manager, we need to make sure that they actually share examples of how their cost transparency might look. It makes for a much more interesting discussion regarding fees and full costs at that stage,” he said.  

He also said that cost transparency needs to be considered throughout the “lifecycle of asset management”. 

“You need to build cost transparency into the design of funds, at a base level when you are setting them up,” Fletcher said.

“You need to bring cost transparency templates into the selection of managers, so into the RFPs. And finally, it should be in the monitoring of those managers as you move forward on a quarterly basis where you have your meetings.”

Cost transparency should be brought in during all of those elements in a similar manner to how ESG and risk management are, he noted.  

This article originally appeared on Mandatewire.com