Midlands-based Local Government Pension Scheme pool LGPS Central has launched a new global active investment grade credit sub-fund, as part of the continued development of its fixed income offering.
The fund has been developed to sit alongside LGPS Central’s existing pooled credit funds, expanding the range of options and providing flexibility to access high-quality credit markets.
The fund will be managed in partnership with three specialist global credit managers, Capital Group, JP Morgan Asset Management and Neuberger Berman, each appointed for their experience across developed market investment grade credit and the ability to operate within LGPS Central’s pooled framework.
LGPS Central already manages an actively managed investment grade credit fund with a significant sterling component, reflecting the need to see closer alignment with UK liabilities and domestic market exposure.
The new fund has been designed to complement this approach by providing access to a broader global investment grade universe, giving the pool the ability to tailor credit allocations more precisely to individual partner fund objectives.
The global investment grade credit universe is large and highly liquid, with an estimated market size of approximately $13trn (£9.5trn).
US dollar and European credit markets in particular, said LGPS Central, “offer advantages” in terms of depth, liquidity and lower dealing costs, which are important considerations for pooled vehicles operating at scale.
Together, the two funds are intended to support different portfolio construction needs, with the additional sub-fund providing greater diversification across global issuers and sectors.
The availability of both funds will enable the pool to adopt a blended approach within their wider fixed income allocations, combining strategies as appropriate for each partner fund.
The new fund will sit within LGPS Central’s established fixed income framework, which is designed to balance resilience, diversification and liquidity across different market environments.
Active management will play a central role, reflecting the belief that disciplined security selection and risk management are essential to navigating credit markets through the cycle.
“By partnering with three experienced global credit managers within a single pooled structure, we are able to combine differentiated active approaches with consistent oversight, scale and governance, while continuing to maintain flexibility in how we access global credit markets on behalf of our partner funds,” said LGPS Central chief investment officer Jayne Atkinson.
As with all LGPS Central pooled funds, the new fund has been developed with engagement with partner funds and with a strong focus on governance, transparency and scalability.
Also, responsible investment considerations will be integrated throughout, in line with LGPS Central’s wider approach to stewardship and engagement.
The launch forms part of LGPS Central’s broader work to ensure its pooled investment platform remains capable of meeting the investment needs of both founding and newer partner funds, while maintaining a clear and coherent range of funds that support effective long-term portfolio construction.
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