UK Railways Pension Fund Makes Major Manager Changes
Our partners MandateWire have issued a release about changes at RPMI which might be of interest and ties two of key speakers of RAO Global - Europe 2021 together; Michael Marshall of RPMI Railpen and Sir Jon Thompson of the FRC whose Stewardship report has seen a third of applicants be rejected from their listing. Hear more about why on Oct 5th.
By Rachel So
Published 13/09/21
The circa £32bn Railways Pension Scheme made a number of changes to its manager roster over the year to December 31 2020. Separately, the scheme is focusing on strengthening its internal capabilities and improving the efficiency of its pooled funds.
The scheme’s annual report reveals that a number of managers were added to the roster over 2020.
Specifically, Schroder Adveq joined the scheme in January, Greencoat Capital in May, Christofferson, Robb & Company in November and Nephila Capital in December.
The scheme also terminated mandates with BlackRock in February and Aspect Capital in March 2020.
Railpen declined to comment on the manager appointments and terminations.
Elsewhere, the report states that the scheme has been reducing its use of external active management over the past few years. It has been improving its internal capabilities and recently launched its internal trading desk, as reported by MandateWire.
The range of pooled funds in which the scheme invests have also been reviewed and simplified in recent years.
This is to ensure that they are “flexible enough to be tailored to the needs and particular circumstances of individual sections, while also allowing scheme assets to be invested as much as possible as if they belonged to a single pension fund”, the report reads.
According to the report, the focus for pooled fund management in 2020 has been on the efficient implementation of investments.
Within the Growth Pooled Fund, the scheme amended some of the allocations within the equity portion of the portfolio. Further investments were also made to other diversifying asset classes.
The Illiquid Growth Pooled Fund made further allocations during the course of the year, with a particular emphasis on investments focused on communication, innovation and financial services.
Meanwhile, the Long Term Income Pooled Fund made a number of new investments in 2020, including an operational wind farm in Scotland and a stake in a renewable energy plant in Lincolnshire.
The De-risking Fund Platform, which includes the Government Bond Pooled Fund, Non-Government Bond Pooled Fund, Long Duration Index Linked Pooled Fund and Short Duration Index Linked Pooled Fund, experienced no material changes, however “the focus remains on simple and effective implementation, mainly by the in-house team”, the report reads.
The scheme did not provide additional detail on the changes of the investment portfolio but commented: “We review our allocations across the scheme pooled funds on an ongoing basis. Our objective is to ensure that our portfolios are sufficiently diversified and protected, while positioned to benefit from long-term investment trends, to deliver our purpose to secure our members’ future.”
Separately, Railpen has signed the Financial Reporting Council’s new UK Stewardship Code 2020 along with other investors including the circa £20bn National Employment Savings Trust.
The investment split within the defined benefit section of the scheme as at December 31 2020 stood at 91.6 per cent pooled funds (61.8 per cent growth, 7.3 per cent private equity, 5.6 per cent illiquid growth, 3.9 per cent government bonds, 3.4 per cent passive equity, 3.1 per cent long-term income, 2 per cent short duration index-linked bonds, 2 per cent global equities, 1.2 per cent non-government bonds, 0.5 per cent infrastructure, 0.5 per cent long duration index-linked bonds and 0.2 per cent cash), 8 per cent directly held securities (5.3 per cent BRASS and AVCs, 2.6 per cent substitution orders and 0.2 per cent annuities) and 0.5 per cent cash and other.
