Border to Coast Pensions Partnership, the largest local government pension scheme pool, has launched its first index proposition, to enable partner funds to pool £2.6bn of assets into a customisable strategy.
Compared to partner funds’ existing solutions, the new Global Multi-Factor Equity Index Fund aims to deliver savings in fees every year due to the benefits of collective scale and strong strategic partnerships.
Designed in close collaboration with partner funds, the new proposition expands access to global equity strategies within the pool.
The proposition will blend stocks and target five traditional fundamental factors: value, momentum, quality, low volatility, and size.
Border to Coast will retain full control over the evolution of the fund, including its decarbonisation metrics and policy on exclusions.
This ensures the proposition considers the long-term financial risks that net zero and responsible investment policies seek to mitigate.
Launched with support from five of its partner funds: Tyne & Wear, Lincolnshire, Cumbria, Bedfordshire and Warwickshire, Border to Coast has appointed global investment behemoth Blackrock to manage the proposition, in conjunction with STOXX as the index administrator, providing partner funds access to index investing, research, factor-based solutions, and product design.
Councilor Ken Dawes, chair of Tyne and Wear Pension Fund committee, said: “The launch of our partnership’s first index fund was a real collaborative effort. This is a cost-effective solution which complements our existing pooled equity funds.”
Jo Kempton, head of Lincolnshire Pension Fund, added: “Working together with the Border to Coast investment team we have developed a proposition that not only cuts fees but will also remain aligned with our investment policies.”
Kempton added: “This isn’t just passive exposure to an index, it brings the best of active management together with the cost-effectiveness of index investing to provide a sophisticated solution that we wouldn’t have necessarily had access to prior to our partnership.”
The fund will seek to outperform the MSCI All Country World Index by at least 0.5% a year, net of fees, over rolling five-year periods.
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