The BT Pension Fund is the largest UK pension scheme. The scheme is so large it has a dedicate investment house to manage the fund, Hermes Investment Management.
[www.hermes.co.uk]
Some interesting facts can be found in the annual report
[http://www.btpensions.net/41/scheme-report-and-accounts]
Some useful information from the report:
page 4: to mitigate the risks facing the Scheme from the on-going effects of the financial crisis and, in particular, the resulting economic and political fallout in the Eurozone. This was achieved through a lower exposure to Eurozone assets, particularly the countries in Southern Europe, and a lower exposure to equity markets.
page 6 The scheme’s assets are £38,783 million
page 32 Asset Allocation:
Equities 31%
Fixed interest 22%
Inflation-linked 15%
Alternatives 21%
Property 12%
page 33 External Fund Managers also manage the fund:
Hermes managed approximately 52% (In house manager)
The Scheme holds the majority of its UK equities in a passive portfolio managed by Legal & General Investment Management (LGIM) which tracks the FTSE 100 Index
M&G Investment Management manages the majority of the Scheme’s UK corporate bond investments, totalling approximately 10% of Scheme assets
[M&G is a part of Prudential PLC]
Page 76 lists the top 30 Investments
Investment Market value £ million % of net assets
UK Treasury 0.625% 2040 642 1.7%
UK Treasury 2% 2035 566 1.5%
UK Treasury 2.5% 2024 550 1.4%
UK Treasury 0.75% 2034 496 1.3%
Kemble Water Holdings 487 1.3%
UK Treasury 1.875% 2022 444 1.1%
UK Treasury 0.125% 2044 433 1.1%
UK Treasury 4.125% 2030 430 1.1%
UK Treasury 1.125% 2037 405 1.0%
UK Treasury 1.25% 2027 359 0.9%
The Centre: MK Property 329 0.9%
UK Treasury 2.5% 2020 313 0.8%
Bridgewater Pure Alpha Fund II 303 0.8%
UK Treasury 0.125% 2029 299 0.8%
UK Treasury 1.25% 2032 296 0.8%
UK Treasury 0.625% 2042 281 0.7%
Milton Park Property 280 0.7%
Network Rail 1.75% 2027 271 0.7%
BlueCrest Capital International 257 0.7%
BBTPS Fund 245 0.6%
Hermes GPE Global Secondary 236 0.6%
UK Treasury 1.25% 2055 194 0.5%
Ashmore Debt Fund EMarkets 176 0.5%
UK Treasury 0.5% 2050 167 0.4%
RWC Specialist UK Focus Fund 162 0.4%
UK Treasury 0.375% 162 0.4%
UK Treasury 0.75% 2047 161 0.4%
RH Fund 1 L.P. 141 0.4%
Bluewater Property 132 0.3%
Castle Court Property 130 0.3%
Totals 9,347 24.1%
Interesting to see that the top 30 Investments of £9,347 million (£9.347 Billion) account for 24.1% of the fund.
Also notice the need to invest in government yielding gilts, the need is clear, to meet monthly pension payments to deserving retired people who have worked hard for BT. This is known as Liability Driven Investment, the investments held are meeting immediate liabilities.