LGPS Central starts search for targeted return managers

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LGPS Central, an investment pool established to manage the assets of eight Midlands-based local authority pension funds with some £50bn (€57.8bn) in assets between them, is looking for fund managers to run its upcoming targeted return fund worth approximately £700m.

Although subject to slight variations as the process progresses, as a general guideline, the mandate is expected to include that the fund will:

be benchmarked against 3-month GBP SONIA (or equivalent);
be expected to return a provisional active net performance of 3-4% p.a. above benchmark;
consist of between 6 and 12 different investment strategies which, in combination, will have a correlation of below 0.5 to global equity markets;
provide sources of return which are not entirely reliant on the market direction of mainstream asset classes such as equities and bonds, plus an additional element of manager alpha;
be invested in underlying assets that have a high degree of liquidity;
provide a pattern of returns which is genuinely diversified from most other assets held within the pension funds of the potential investors;
be unconstrained geographically.

A search document stated that successful candidates would need to be able to demonstrate:

a consistent, robust, repeatable, investment process;
low cost, fully transparent, value for money;
responsible investment integration as part of the investment process;
an actively managed portfolio

The tendering process is a three-stage process that will be fair, transparent and non-discriminatory. The procurement – to which the pool placed a notification of search on the IPE Quest platform – will be managed electronically by LGPS Central’s targeted return team via its e-procurement platform system, In-tend. Once registered, candidates will be able to see the project under the ‘tenders’ section and ‘express an interest’ to view the documentation.

Successful applicants will then be invited to complete a request for proposal (RFP) before a competitive dialogue and due diligence during final interviews and selection, the documwent noted.

The closing date for will be 29 March 2021 12pm UK time, after which applications will not be accepted.

LGPS Central member funds include Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, West Midlands, and Worcestershire. It is jointly owned on an equal-shares basis by those eight authorities, which have a combined AUM of c.£50bn. For more information, please see our website.