Merseyside awards £3.8bn equity protection brief
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Merseyside Pension Fund has appointed investment and advisory services provider Schroders Solutions to implement a £3.8bn equity protection strategy. The mandate adds to a string of recent wins for the outsourced provider.
Since being appointed by the Northern LGPS pool, Schroders said it has “collaborated extensively” with Merseyside to design a solution which aims to safeguard the scheme's equity portfolios from any downturn ahead of the LGPS valuation in 2025.
The fund’s director of pensions, Peter Wallach, said: "We are very pleased with the advice and support of Schroders Solutions in working with us to implement an equity protection strategy that aligns with changes to our investment strategy and provides some stability in the funding level ahead of next year’s actuarial valuation.”
According to Schroders, the strategy enables the scheme to maintain its equity exposures while managing downside risk. It also supports the fund's private asset investments by keeping a balanced allocation between liquid and illiquid assets “even in the event of a sell-off in listed markets”, the manager claimed. It said current market dynamics and solution design created an opportunity to implement the protection strategy cost-efficiently.
Schroders executive chair James Barham said: “Developing innovative solutions that work in partnership with the scheme's investment strategy is one of our core competences and we look forward to developing our relationship over the coming years.”
The appointment follows several previous large wins for Schroders Solutions. Earlier this month, Schroders Solutions won a brief to manage £270m for Metfriendly, the friendly society for members of the UK police forces. In May, the Merchant Navy Ratings Pension Fund chose the provider as its fiduciary manager, while the trustees of the Tesco Pension Scheme outsourced the management of the in-house portfolio to Schroders in February this year. Schroders is also the OCIO for a £1.2bn pension investment portfolio for Kier Group, a £10bn portfolio for Centrica, and is the investment partner of Lloyd’s of London.
The approaching endgame may be one reason why some private sector defined benefit schemes are moving away from in-house management towards OCIO. Apart from Schroders, schemes have appointed BlackRock, Goldman Sachs and Cardano among others.
