UK – Strathclyde local authority pension fund is to bring in-house the management of the feeder vehicle for its investment in the Pensions Infrastructure Project (PIP), a vehicle being developed by the National Association of Pension Funds and Pension Protection Fund.
Richard McIndoe, head of pensions at the £11.6bn (€13.4bn) scheme, said the decision to adopt "hands-on" management of the New Opportunities Portfolio (NOP) – which also targets real estate, private equity and private debt – reflected its bias towards direct investment in specific opportunities regardless of asset class.
It is an unusual step for a scheme that has to date favoured external management for its £850m domestic portfolio and £150m invested in a global fund of funds.
"There's definitely a change of emphasis," he said. "We're not packaging stuff into big portfolios with the New Opportunities Portfolio. The PIP is a fund but it's still clearly more direct than most of our investments."
The NOP's six investments have included a short-term property debt deal with City Legacy, the consortium set up to manage property related to the 2014 Glasgow Commonwealth Games.
Although McIndoe acknowledged the potential for conflicts of interest for pension funds investing in local projects, he pointed to investment parameters drawn up before the NOP launched three years ago to manage both local politics and geographic-concentration risk. The scheme's investment committee will consider a new investment report commissioned from PwC over the next few weeks.
"The benefits of investing locally are that you get better visibility and more transparency. You can see it, touch it and kick it," said McIndoe.
The new manager of the targeted £300m opportunities portfolio is likely to come from a real estate or infrastructure background, rather than from private equity.
"The portfolio isn't specific to one asset class and we have no preconceptions because it’s quite varied. But the new manager will need to be able to close deals," he said.
