Interview – Surrey Pension Fund
INTERVIEW – NEIL MASON
“As always with pensions, the challenges are the unknown unknowns.”
Assistant director and local government pension scheme senior officer at the £5bn Surrey Pension Fund talks to Andrew Holt about reducing his exposure to the UK, the dilemma of investing in China and why he doesn’t want to be super sexy.
What’s in your portfolio?
Our largest allocation is to equities – listed and private – which amount to around 60% of our portfolio. This is because being an open-ended scheme we are cashflow positive and until the recent economic turmoil we were expecting to be cashflow positive through to 2029, although that may become a challenge due to the inflation outlook. But, it is worth saying that, even if we weren’t cash- flow positive, we would still want to be exposed to growth assets.
Looking at our overall portfolio, we also have 15% in alternatives, including prop- erty. Our bond allocation is in multi-asset
credit where we have exposure to lots of different fixed interest assets, capturing income and capital appreciation – and which offer us other forms of return with different risk premia.
The only gilts we hold are to match the payments to the employees in our scheme who are exiting. We set that aside in the portfolio to match that liability profile. That is only about 3%. We never expect it to be more than 5%.
What type of equities do you hold? It is a mix. We have 16% in UK equities, which is a legacy of a tradition of home bias in local government pension
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schemes. Although we would want to have some weighting in the UK, 16% is probably too much, and we will be recom- mended changing that to the committee. The rest is global equities. We are moving more into emerging mar- kets. We still see that as a good opportunity to provide diversification and returns. It is a global portfolio. We have some pas- sive regionally managed portfolios, but not much.
Could you expand on the changes? The relationship we have with our pool- ing company [Border to Coast] is interesting. We are owners and custom-
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