Interview – London CIV


You are no stranger to local government pension schemes having joined from LGPS Central. But how does the size of London CIV affect your approach to pooling? It is challenging having 32 clients com- pared to the nine we had at LGPS Central. We have double the number of partner funds than the next largest pool. The abil- ity of the investment team to meet every client is limited, so we attach great impor- tance to our London CIV client team. It is not just about communicating with 32 organisations. We have 32 clients, 32 shareholders, 32 pensions officers, 32 advisers and 32 consultants. So, in essence, we have to deal with a lot of stakeholders.


There are many ways to do this. In lock- down, we had a monthly business update meeting and regular meetings with the investors in each fund. We keep in touch once the funds are launched, grouping likeminded clients [seed investment groups] together. That is critical to devel- oping things from our perspective.


That is interesting. In the early days of pooling London CIV was under pressure to speak with one voice, which must have been challenging. How are you circum- venting that problem? Like everyone, we embrace the diversity of our clients. Yes, it is a challenge, but whatever their political differences or ambitions, the key for finding common ground is bringing ESG into the funds we manage for our clients. It is, therefore, critical to have our own London CIV net- zero target though we must remember that each of our underlying clients sets their own target.


They invest in what aligns with their own strategic asset allocation, and we set up funds which have an ESG, Paris align- ment or net-zero direction of travel for them. That is a key pooling cry. It is about moving away from the old days when people looked at risk and return to now looking to net-zero targets and liquidity requirements along with risk


14 | portfolio institutional | March 2022 | issue 111


and return. Again, it is about making sure everyone embraces their diversity rather than going off and investing in separate funds, which is counter to what pooling is about. That has been working well and so we have been moving in the right direction.


Could you give some examples? We are doing some work on property fund launches. We already have the Lon- don Fund [with LPP Investments] and the Inflation Plus Fund that are investing in property and holding workshops with cli- ents who want to set up new property funds. It is a win-win for clients to invest in existing funds because it means more pooling and better value for money. So, we get them into groups of those wanting to invest in residential property, for exam- ple, and then set that up as the seed investment group. It is about making sure they are like-minded investors. Fun- nily enough, they do not always go along political grounds. Actually, politics should wash through, we are after a common ground and investing for the long term.


So, you have pooled around half of your member funds’ assets? It is a bit higher now. In the latest quarter we increased that by 2.9%. So, in terms


of progress on pooling, we have gone to 58% from 55%, which is a big achieve- ment. We have launched new funds, but there have also been win-wins of people taking money which has not been pooled yet into existing products. That has been important. Overall, our clients have close to £50bn in assets.


What is your approach to outsourcing investment strategies?


This is where we differ from other pools. We don’t do in-house management; eve- rything is externally managed. We select managers to fulfil our fund requirements, but we are the AIFM [Alternative Invest- ment Fund Manager]. Essentially, we oversee the manager or managers, so we are not completely outsourced. London CIV also has multi-manager funds. We design a product and then monitor and manage those investments. But we do not currently manage the money directly. What we are beginning to do more and more is select several man- agers to run a single mandate while we sit as the overarching manager, doing the risk analysis and selecting the managers.


What happens if a client wants to invest in a specific strategy which is not in your fund range?


“I am wary of the assumption that if inflation goes up, we will raise interest rates and then inflation will come down again. I am not sure it works that way. In my experience, they leapfrog each other.


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