ASSET CLASSES

The LPFA Board is responsible for setting the Strategic Asset Allocation (SAA), which is outlined in the Investment Strategy Statement. The SAA specifies targets for how much of the Fund is to be invested across eight different asset classes. It also specifies tolerance ranges around these targets, within which LPPI are expected to operate.

Each asset class has its own investment objective, and within each asset class there are a number of constraints to ensure diversification within the asset class. These include limits on the amounts that can be invested within a single sector, country, manager, and single asset.

The asset classes in which the Fund invests are outlined below. The Fund’s cash is invested through the Group Investment Syndicate, which is managed by the Greater London Authority. The majority of other assets are invested through LPPI. More information is available on the investment management pages on the LPP website.

Allocation: 1%

Range: 0%-10%

Purpose: to maintain a store of liquidity in a cost-effective manner by allocating capital to securities or funds in appropriate markets.

Allocation: 9%

Range: 0%-12.5%

Purpose: to gain cost-effective exposure to (mostly illiquid) diverse sources of return linked to global credit markets and credit instruments, while minimising risk of permanent loss.

Allocation: 15%

Range: 0%-20%

Purpose: to gain cost-effective exposure to diversifying sources of return distinct from global equity beta and bond duration.

Allocation: 2.5%

Range: 0%-15%

Purpose: to deliver optimal long-term risk-adjusted returns, capitalising on opportunities in the global fixed-income market, with a strong focus on capital preservation.

Allocation: 10%

Range: 0%-15%

Purpose: to gain cost-effective, diversified exposure to global infrastructure assets, predominately in the UK, Europe and North America. Exposure to UK infrastructure is achieved via investment in GLIL, which is a fund jointly managed by LPPI and other LGPS funds.

Allocation: 7.5%

Range: 0%-15%

Purpose: to provide long-term total return by accessing attractive private equity opportunities at a competitive overall cost.

Allocation: 45%

Range: 35%-55%

Purpose: to provide long-term total return from investing in global public equities while controlling exposure to fundamental business risk.

Allocation: 10%

Range: 5%-15%

Purpose: to gain cost effective, diversified exposure to property assets that earn predictable cash flows and provide a partial hedge against inflation. Additional exposure to real estate in and around London is achieved via investment in The London Fund, which is a fund jointly managed by LPPI and the London Collective Investment Vehicle.



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