The LGPS Central UK pension pool has launched a Buy and Maintain Sterling Investment Grade Credit Fund, developed in response to discussions with West Midlands Pension Fund (WMPF) as part of their Strategic Asset Allocation review and an increased appetite for sterling based corporate bonds.
The fund, structured as a sub-fund within LGPS Central’s Authorised Contractual Scheme (ACS), provides Partner Funds with a durable investment option tailored to withstand market cycles while delivering reliable cash flows and steady returns.
The strategy emphasises a low turnover, “Buy and Maintain” approach, designed to benefit from LGPS Central’s ACS pooled vehicle, which provides cost efficiencies, flexibility, and liquidity for public market investments. WMPF have confirmed initial seed investment of circa £650 million, with the potential for further commitments from other Partner Funds in the future.
Ann-Marie Patterson, Investment Director for Fixed Income at LGPS Central, said, “Through a rigorous development process, this fund aims to withstand various credit cycles and deliver consistent performance.”
Patterson added that the strategy focuses on constructing a portfolio with low default risk, emphasising sectors with high asset backing and resilience to disruption.
The fund will concentrate on sterling-denominated, investment-grade credit with global exposure, including corporate bonds, securitised credit, hybrids, and covered bonds.
While benchmark-agnostic, it aims to hold at least 60% in sterling investment-grade credit, ensuring both diversity and a portfolio of robust high-quality credit. The Buy and Maintain strategy aim is to hold securities until maturity with the expectation of reinvestment, trading only when significant value can be added, preserving the fund’s low turnover and predictability, providing a predictable cash flow if income is required.
L&G Asset Management has been selected to manage the fund, following a thorough procurement process. As one of Europe’s largest asset managers, L&G brings substantial expertise, with over £60 billion already managed on behalf of LGPS clients.
