• 212.1% total returns over seven years, compared to 146.0% for the benchmark index
• £40m estimated cost-savings through internal equity portfolios

Pension pool specialist Local Pensions Partnership Investments (“LPPI”) announces its internally-managed global equity large cap portfolio (“Large Cap Portfolio”) has achieved seven-year total returns of 212.1%, or annualised returns of 17.6%, outperforming the MSCI World Index which delivered a total return of 146.0% over the same period, or annualised returns of 13.7%.[i]

This performance places the Large Cap Portfolio in the top quartile of global portfolio manager peers over the period since inception.[ii]

LPPI also announces that its internally-managed global equity small and mid-cap portfolio (“SMID Portfolio”), launched in 2018, has also achieved strong three-year performance since inception, with a 70.8% total return over the period, or annualised returns of 19.4%, outperforming the MSCI World SMID Index which delivered a total return of 31.8% over the same period, or annualised returns of 9.6%.[iii]

This performance places the SMID Portfolio in the top quartile of global portfolio manager peers over the period since inception.[iv]

Both portfolios are managed with a common philosophy of investing in businesses with long-term sustainable competitive advantages and which are supported by durable runways for growth and high-quality management teams.

Given the long-term horizon and concentrated nature of the philosophy, the investment process centres around in-depth analysis of the portfolio holdings with ESG integrated into the process.

The strong performance of LPPI’s internally-managed equity portfolio demonstrates the success of internalising equity portfolios, and delivers tangible benefits to clients:

• On total current internally-managed assets of approximately £5bn, each 1% of potential future annualised outperformance equates to an additional £50m run rate in annual total return that would not be achieved while passively invested in the MSCI benchmarks.
• Given the low fee basis of internal portfolio management, the total cost-savings to clients from the internalisation of the two portfolios is estimated to be in excess of £40m since inception.[v]

Richard Savage, Head of Global Equities, LPPI, says:

“The strong performance of the internally-managed equity portfolios demonstrates that with a long-term philosophy centred around being selective owners of durable business models, we are able to deliver superior performance not only relative to the passive benchmark but also versus the commercial asset management peer group.

“The success of the portfolios could not have been achieved without a talented in-house equity analysis team and long-term focused clients who have demonstrated their belief and support for our investment approach. I would like to thank my team and our clients for their continued dedication and support.”

LPPI Large Cap Portfolio performance

LPPI Small to Mid-Cap Portfolio performance

LPPI’s pooling model creates economies of scale, including allowing access to more cost-effective assets in private markets, increasing buying power to negotiate fund manager discounts, and internal management. Internal management of assets is a key element of LPPI’s success, and the business currently manages over half of the LPPI Global Equities Fund in-house. The company also invests client assets directly in infrastructure through the LPPI Infrastructure Fund and via GLIL Infrastructure. LPPI’s plan is to incrementally grow the in-house investment team.