In the intricate world of pension fund management, achieving a delicate balance between liability matching and growth generation has spurred a strategic evolution in fixed-income investing. Responding to this dynamic, LGPS Central has announced the launch of a new pooled global credit fund, a significant expansion of its fixed-income capabilities designed for its eight partner pension funds. This new authorized contractual scheme is set to operate alongside the organization’s existing, actively managed investment grade credit fund, which maintains a strong focus on sterling-denominated assets. The introduction of this global vehicle marks a pivotal step towards offering a more comprehensive and diversified credit solution, enabling partner funds to navigate the complexities of international markets with greater precision and opportunity. This initiative underscores a forward-thinking approach to portfolio construction, recognizing that a global perspective is increasingly crucial for long-term financial stability and performance in today’s interconnected economy.
Strategic Diversification and Flexibility
The primary driver behind the new fund is the pursuit of enhanced diversification and a more adaptable allocation framework for partner funds. While the existing sterling-focused credit fund is expertly tailored to align with UK-based liabilities, the new global fund unlocks the vast investment grade universe beyond domestic borders. This expansion provides critical access to a wider array of international issuers and economic sectors, thereby reducing concentration risk and opening doors to opportunities in different market cycles. By offering both a sterling-centric and a global credit fund, LGPS Central can now implement a sophisticated, blended approach to asset allocation. This dual-fund structure allows for a more flexible and customized strategy, enabling the organization to precisely tailor credit exposures to meet the unique objectives, risk tolerances, and liability profiles of each individual partner fund. The result is a more resilient and dynamic fixed-income portfolio that is better equipped to capitalize on global trends while maintaining a disciplined focus on its core mandate.
Expert Management and Active Strategy
At the heart of the new fund’s operational framework is a collaborative management structure that brings together three distinguished global credit managers: Capital Group, J.P. Morgan Asset Management, and Neuberger Berman. These firms were meticulously selected for their profound expertise in developed market investment grade credit and their demonstrated capacity to function effectively within the pooled structure that LGPS Central champions. A cornerstone of the fund’s philosophy is its commitment to active management, a strategy deemed essential for disciplined security selection and proactive risk mitigation across fluctuating market conditions. Chief Investment Officer Jayne Atkinson noted that this multi-manager arrangement effectively combines the differentiated active approaches of three expert firms under a single, cohesive framework. This model was designed to deliver consistent and rigorous oversight, achieve economies of scale, and ensure robust governance, all while preserving the crucial flexibility required by its partner funds to meet their distinct investment goals.
