West Midlands Pension Fund seeds ‘buy and maintain’ bond fund with LGPS Central

The Buy and Maintain Sterling Investment Grade Credit Fund was developed following discussions between the pool and the pension fund following a review of West Midlands’ strategic asset allocation.

The fund is managed by Legal & General Investment Management (LGIM), and LGPS Central said it expected more investment 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.”

The strategy is focused on low default risk, emphasising sectors with “high asset backing and resilience to disruption”, LGPS Central said in a statement.

Although it has a global remit, the fund will focus on sterling-denominated investment-grade credit. It will typically hold securities until maturity and reinvest the proceeds, unless “significant value” can be added through trading.

James Sparshott, head of strategic clients at LGIM, said the asset manager was experiencing a significant increase in demand for buy-and-maintain strategies from local authority pension schemes.

The buy-and-maintain fund is the fourthbroad bond strategy launched by LGPS Central, alongside emerging markets, global corporate bond and multi-asset credit funds. The pool has also been hiring additional fixed income expertise in recent months as pooled assets increase.

Earlier this year, the pool also allocated £200 million to a real estate debt fund managed by M&G Investments.