WPP shuffles managers and builds investment firm

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The Wales Pension Partnership has seen new manager lineups across several sub-funds, including the appointment of new global credit and absolute return bond managers, alongside an addition to its emerging market equity portfolio. The changes coincide with the pool establishing its own regulated investment management company as part of government reforms.  

Russell Investments, which handles assets and managers in the £19bn Local Government Pension Scheme pool in Wales, has picked Coolabah Capital Investments to manage about £154m in the global credit sub-fund. Coolabah replaces Western Asset Management, which had a mandate of £221m, with assets later moved to the other global credit managers, Fidelity, MetLife Investment Management and Robeco.  

The pool said the event was “the culmination of [Russell Investments’] continuous manager review process in which they were already working towards replacement options for Western”, adding that recent events with [the US Securities and Exchange Commission have sped up this process. Last November, the SEC charged Western’s former co-chief investment officer Ken Leech with fraud. He was also charged with criminal fraud by the US Department of Justice, which said Leech had “used his position to cherry pick trades and prop up his favored but failing accounts at the expense of others”. 

Within fixed income, Russell also restructured WPP’s absolute return bond fund, appointing Oaktree Capital Management and DNCA Investments—part of Natixis Investment Managers—to replace Insight Investment. Oaktree and DNCA receive about £69m and £128m respectively, with target allocations of 15% and 24%. Their inclusion reduces exposure to incumbent managers Aegon and Wellington Management, whose weights had increased following the removal of Putnam Investments last year.  

The selection followed “an extensive review of Insight’s strategy and the broader manager universe”, with WPP citing the new managers' “higher conviction, more specialised focus in credit and rates/fx markets, respectively”.  

In equities, Virginia-based Sands Capital is being hired for a £17m brief in the emerging markets equity sub-fund, with a target allocation of 6%. The fund is currently managed by Artisan, Bin Yuan, Barrow Hanley, Axiom, Numeric, and Oaktree.  

Wales builds investment company to meet government demands  


The changes were made at the same time as ‘Project Snowdon’ was underway – a working group made up of senior council officers, along with a steering group consisting of s151 officers. Their task was to have a plan for building an investment management company regulated by the Financial Conduct Authority, as stipulated in the government's ‘Fit for the future’ consultation last year. The option of merging was also considered but dismissed as transition costs were estimated to be about £50m.  

The government said earlier this month that the Wales Pension Partnership would manage £25bn – equivalent to the partner funds’ pooled and non-pooled assets together – saying that “by pooling the pension funds of 22 local authorities it will unleash the full potential of the Local Government Pension Scheme to act as an engine for growth in Wales”.  

Pooling the £6bn non-pooled assets to reach a £25bn pool could take about five years, treasury and pensions investments manager at Carmarthenshire County Council, Anthony Parnell, said.   

Among central government’s criteria for how it thinks LGPS pools should be structured is in-house management, but Parnell said there will be “no in-house management”. The pool will submit its application to the FCA by the end of September. 

WPP currently operates 10 investment sub-funds. Manager allocations include: 

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