Legal & General manages £27.1 billion (€34.9 billion) of assets in 40 passive funds on behalf of 40 UK local authorities, making the UK-based company responsible for almost 59% of all LGPS exposure to passive strategies.
This is according to Modern Investor's analysis of Citywire Global WOW database, which is accurate to the end of June 2015.
Our data show that the single most popular index tracker among UK LGPS is L&G UK Index, which has £7.7 billion (€9.9 billion) under management on behalf of 28 local authorities. This is ahead of exposure to the L&G US Index, which accounts for £3.5 billion (€4.5 billion) in assets managed on behalf of 19 LGPS.
Among the top ten most sought-after trackers by UK local authorities, only four are managed by asset managers different to L&G.
The other popular passive strategies are SSGA MPF UK Equity Index Sub Fund, BGI Aquila Life UK Equity Index Fund, UBS UK Equity Tracker A-Pen and SSGA MPF All World Equity Index Sub Fund.
Among the top 10 funds only one — L&G Over 5 Year Index-linked gilts fund — is not an equity fund.
All the other strategies track stock indices, with UK equities attracting £13.7 billion (€17.6 billion) of the £46 billion (€59 billion) LGPS invested into trackers, followed by almost £8 billion (€10.3 billion) in global equity.
When looking at which local authorities are putting the most cash to work in passive strategies, there is one clear standout.
The £15 billion (€20 billion) Strathclyde Pension Fund has £5.26 billion (€6.7 billion) of its total assets allocated here. Speaking to Modern Investor in August, the fund’s head of investment, Richard McIndoe, explained how he envisions increasing this allocation further.
Elsewhere, Greater Manchester (£2.5 billion) and Northern Ireland (£2 billion) are also putting substantial money to work in passives. These two schemes have invested in pooled funds managed solely by L&G.
While the majority of the UK local authorities have allocated capital in at least one passive strategy, 16 pension schemes out of 93 have been reluctant to invest into index trackers, including authorities such as City of London, Cornwall and Lancashire.
All these numbers comes from the Modern Investor’s analysis of Citywire’s Global WOW database, which contains data from 95 LGPS about their investment in 1527 pooled funds. In the process of refining and cleaning the data, we were able to identify 89%, or 1360, of the funds. Together, they represent £84.4 billion (€108.6 billion) of assets invested on behalf of 93 local government pension schemes.
Last week, Modern Investor found out that only four actively managed funds were able to attract over £1 billion (€1.3 billion) of asset for the UK local authorities. In our next data-driven story, we will look at what asset management companies are the most trusted by UK LGPS.