Brunel Pension Partnership, one of the UK’s eight local government pension scheme (LGPS) asset poolers, has said it has now reached the position where savings exceed cost on an annual basis.
In the foreword to Brunel’s latest annual report, chair Denise Le Gal said the pool was now “breaking even on the Department for Levelling Up, Housing & Communities (DLUHC) return”.
Each year DLUHC requires each LGPS pool company to submit an update on their progress on pooling. This includes an update on the annual running and set-up costs compared with the fee savings being achieved.
Le Gal said that based on the assets transitioned from its client funds, Brunel was making net fee savings of £13m per annum (£24m gross) versus pre-pooling.
She also said Brunel’s total investment management fees were 13 basis points cheaper than the market, according to third party analysis.
“From this vantage point, pooling seems to be working,” said Le Gal.
Chief executive officer Laura Chappell said that through Brunel’s Authorised Contractual Scheme, the pool had saved £17m versus “statutory investing”.
“We have remained within budget every year, even recording a £215,000 rebate in 2020,” she wrote.
80% of fund assets pooled
Chief operating officer Joe Webster highlighted that as at the end of December 2021, Brunel had transitioned more than £31bn (€37bn) of assets from its 10 clients, around 80% of their total assets, with further transitions due in 2022.
Brunel offers each of its clients more than 20 portfolios to implement their investment strategy. Le Gal said new cycles of private market funds were due in the first half of 2022 “and so, as the portfolio construction work draws ever closer to completion, we can focus more exclusively on client outcomes”.
Also on the agenda for Brunel this year, according to the pool’s annual report, are its “climate stocktake” – a review of the climate policy it announced in 2020, the evolution of its Paris-aligned benchmarks for its active funds, building a “value-for-money scorecard”, and supporting clients’ reporting requirements.
Responsible investment is a major theme for Brunel, which tries to push the broader industry with regard to climate change, diversity and more. In his contribution to the annual report, chief investment officer David Vickers said the pool had been “ceaseless in our endeavours” in pursuit of its aims.
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