With investment markets uncertain, being an investor with a global view and the flexibility to take advantage of opportunities has seen OPTrust “doing well”, its chief investment officer James Davis says. An evolution of its total portfolio approach keeps it focused on the key metric that matters to members: generating the return needed to pay pensions.

The evolution of the total portfolio approach used by OPTrust has been critical to the investment team’s ability to take advantage of the current uncertainty in markets according to chief investment officer, James Davis.

“Markets are absolutely crazy, everyone is hoping we will see something to alleviate the uncertainty, but we are doing well through it,” Davis says. “Being a global investor makes all the difference in this type of environment.”

The most recent evolution of the TPA journey, that began a decade ago when Davis introduced the member-driven investing strategy, is folding all the liquid market asset classes into one fund with a single investment objective.

“The team has a lot of flexibility, if it wants to be in credit, or gold, or equities or whatever they want to be in as long as it is liquid, they have huge freedom,” Davis says.

The newly named total portfolio management group, formerly the capital markets group, has flexibility to adjust the portfolio so long as it is within the risk budget that the CIO decides is acceptable, considering input from the portfolio and market review committee. This committee which includes senior management across investments, finance and risk meets every two weeks to discuss the overall portfolio and macro environment, and dynamically sets the desired risk profile and foreign currency exposure.

More recently the total portfolio management group has been dialling down credit exposures significantly, Davis says, recognising that credit spreads were quite tight especially late last year.

“It wasn’t something I directed them to do,” he says.

Another recent example is the geographical exposures within equities.

“They have been concerned about the situation in the US especially the concentration risk in the Mag 7, and have been exploring opportunities outside of the US,” Davis says.

They have also recently been allocating more to external hedge fund managers, looking specifically for uncorrelated alpha.

“The way the team approaches external managers is very different given this TPA mandate,” Davis says. “They are very focused on absolute return and finding uncorrelated strategies and managers that complement the beta strategies that we run internally.

The structure also allows the fund to look at assets that don’t fall within an asset class.

“It allows us to look at the spectrum,” Davis says.

“For example, are data centres real estate or infrastructure? Some people didn’t invest because they couldn’t decide what it was,” he says.

“We were early movers in gold and that served us well last year. We had more than 6 per cent in gold last year, and that was because the TPA process doesn’t force us to hold things in a benchmark or relative to the benchmark.”

Davis says the investment team is focused on excellence and continuous improvement.

“We can always be building on something better, striving to be more and more innovative,” he says. “We were early movers in machine learning and we are focusing on that and more recently in developing our AI capabilities.”

Systematic investing supports the focus on portfolio resilience and being able to adjust the portfolio through the portfolio completion team.

“It’s great to have something rules based when difficult times come.”

The evolution of TPA

Davis joined the fund as CIO in September 2015 and introduced the member-driven investing strategy and so began the decade-long evolution of its own unique total portfolio approach.

The idea was to stay focused on the key metric that was important for members, the funded status.

Davis says that naturally led to TPA because the aim is not to beat a benchmark but a focus on “the mission that really matters”, which is earning the return needed to pay pensions.

In a slightly unique take on TPA, and to take advantage of the fund’s natural strengths, the approach starts with the ideal illiquid assets allocation and then the portfolio is completed with liquid asset exposures to get the best portfolio to meet objectives.

“While in the perfect TPA-world all capital is at competition, I was always challenged by that because there’s a different liquidity horizon for different assets. So I felt we had to treat liquid and illiquid assets differently,” Davis says.

Private equity and infrastructure were already managed by the same team, and the private markets group uses skills from both asset classes.

“It’s one of our secret sauces in our overall recipe,” Davis says. “It allows us to look at the entire spectrum of private markets as a continuum, as a single pool of capital.”

To manage the overall risk in the fund it was necessary to be able to adjust the liquid portfolio due to changes in the illiquid portfolio or the macro environment. So a capital markets team was internalised, as a kind of portfolio completion group, allowing the use of leverage which was important for managing risk.

“That is something difficult to do if you don’t have internal capabilities,” Davis says.

The fund still uses external hedge funds and credit managers, as well as external managers in private markets.

The maximum potential allocation to illiquid assets is currently 60 per cent, but the actual allocation is less.

“We have a higher allocation to assets we think offer the highest possibility of value creation for the risk we take. We try to maximise that if the opportunities are there, but teams don’t have to be invested,” he says.

“If there’s no good opportunities within the illiquid portfolio then the overall allocations will go down and the allocation to the liquid completion portfolio will go up.

“Right now we have an abundance of liquidity which is important given the uncertainty in this current environment.”

Davis believes that opportunities will present themselves in infrastructure and private equity “in the next little while”, so OPTrust is well positioned to be able to capture some of those.

In addition he’s confident that the uncertainty in public markets will present opportunities.

“Volatility and uncertainty allows for bargain hunting, and more differentiation,” Davis says. “Before if you weren’t in tech stocks you were missing everything, now more variation and less correlation across different stocks and asset classes creates opportunities. There are also opportunities in the commodities space as well, so we are keeping a close eye on those.”

Davis says a concern about inflation is ever-present at the back of his mind.

“It’s hard to predict which way the economy will go, but the potential for inflation is higher now than the past several decades,” he says.

“Positioning the portfolio to capture gains in an inflationary environment is difficult but it can done.”

Private equity fees and a lack of high-quality, United Kingdom-focused fund managers targeting the scale-up sector is impeding UK pension funds’ ability to invest in private equity, according to a new report published by LGPS pool Border to Coast Pensions Partnership which has gathered views from its investment team, partner funds and senior executives at nearly a dozen leading asset managers.

The UK attracts a large slice of global private equity and venture flows into sectors like fintech, creative industries, life sciences and software, but very little of that money comes from domestic pension funds which are deterred by high fee structures that don’t accommodate defined contribution (DC) funds.

UK pension funds also have a statutory duty to cap fees which ignores the additional returns that investments with higher fees can deliver. Calling for clearer guidance from government and regulators, the paper argues pension schemes should assess value for money in their investments so that the focus isn’t just on management fees and value in isolation.

Government and regulators must lead the charge on highlighting the importance of considering net returns and the gains delivered after all costs, which in turn will ensure value for members both financially and in terms of broader economic benefit, says the paper.

“The Local Government Pension Scheme (LGPS) is already a significant investor in the UK, deploying a greater proportion of funds domestically than private defined contribution equivalents. But if government wants to unleash the full potential of the LGPS – and its £425 billion of assets – it should continue in its active engagement with the industry, and take note of the current blockers outlined in this report,” says Border to Coast CEO, Rachel Elwell.

Positively, large pension schemes, including the LGPS, are already significant investors in the UK.  Border to Coast, for example, has already invested more than £12 billion (23 per cent of total pooled investments) on behalf of its partner funds into UK public and private markets to date. This includes nearly £1.3 billion directly into UK private markets, making up 17 per cent of its partner fund’s pooled global private markets investment programme.

Since launching its private markets programme in 2019, Border to Coast has reduced the fees paid by its partner funds by 28 per cent relative to the industry standard. This success is down to the scale that pooling brings and the in-house team of investment experts that can build strong relationships with the right managers for the job. Expertise includes the design of bespoke investment vehicles with clear UK mandates like its UK Opportunities strategy, as well as access to co-investments offered by asset managers which were hard for partner funds to access individually.

Border to Coast aims to outperform a public market benchmark by 300 basis points and achieve annual net returns of 10 per cent from its private equity portfolio.

Limits to the UK asset management ecosystem

It’s not just fees that deter local private equity investment. Another challenge comes from the underdeveloped UK-focused asset management ecosystem. The report points to limited size, strength and number of domestic private equity managers – in particular those focused on earlier-stage companies in comments voiced by Border to Coast CIO Joe McDonell last year.

Fast-growing, young UK companies needing large-scale capital injections of over £20 million often struggle to find UK investors. Ensuring that more UK funds emerge to fill this expansion capital gap should be top of the agenda for the British Business Bank.

“Right now, UK pension schemes allocate so little to venture and growth equity that even the most in-demand UK-based managers are raising the bulk of their capital from overseas investors,” states the report.

It suggests that the government should also consider France’s Tibi scheme as a blueprint for channelling more capital into UK businesses. The scheme provides incentives for institutions that back innovative French technology companies and has significantly boosted France’s asset management ecosystem.

The report also highlights the need for reform in the UK’s planning system to encourage more infrastructure investment at home. Echoing other investors like IFM Investors, part-owned by DC-fund NEST, Border to Coast states that investment is being held back by the uncertainty created by the UK’s complex planning system and historical changes in government policy in areas like the green transition timeline. The report argues that these issues could be addressed by a more stable policy environment.

The authors call for a rapid passage of the Planning and Infrastructure Bill in a form that unblocks the UK’s planning system and the roll out of a well-designed ‘catalytic’ initiatives managed by the UK National Wealth Fund and GB Energy to develop infrastructure projects to the point where private sector capital can step in, de-risking greenfield projects and enabling the ’crowding in’ of private capital.

Amendments to the tax regime to incentivise wider infrastructure investment, akin to the Contracts for Difference regime for renewable energy infrastructure, would also support more investment.

As aggressive US “Liberation Day” tariffs weighed on China’s stock market, Beijing rallied its most reliable financial market troops to stop its domestic equities from nosediving.  

This is the “national team”, a term loosely used to refer to government-affiliated investors. 

Central Huijin Investment, a subsidiary of the $1.3 trillion sovereign wealth fund China Investment Corporation (CIC), first announced to state media on 7 April that it had increased A-share holdings. The fund declared itself as a national team investor and said it intends to “fully unleash its function as patient capital and long-term capital” to stabilise the market.  

Within two days, state pension investor the National Council for Social Security Fund (NCSSF) said it would also increase its domestic equities allocation, as well as state investment managers China Chengtong Holdings Group and China Reform Holdings Corp. The funds collectively pledged hundreds of billions of yuan to invest in A-shares.  

The national team first emerged as a market rescue force in June 2015 at the height of an extraordinary market rout, fuelled by a comedown in A-shares’ frothy valuation and a government crackdown on leverage, which saw the Shanghai Stock Exchange Composite Index losing 30 per cent of its value within three weeks.  

Its approach has pivoted from direct share purchases to broad indices support via ETFs in recent years.  

Senior lecturer at Australia’s La Trobe Business School Michael Li says the national team has played a pivotal role in maintaining the short-term health of the Chinese stock market. In a recent study examining the 2015 intervention, Li estimated that the national team’s ownership helped reduce stock crash risks by 30 to 45 per cent in the following three years. 

But like any complex strategic government intervention, Li says it is possible that the national team’s actions can lead to some unintended consequences. 

The network 

The national team is not a defined list of investors but can include sovereign wealth funds, state investment arms, brokers, regulators and banks whose capital can be mobilised by the central government during times of market stress.  

Some of the most prolific members are Central Huijin, NCSSF, foreign exchange regulator the State Administration of Foreign Exchange (SAFE) and stock lending provider China Securities Finance.   

These institutions have interwoven ownership and reporting structures. Central Huijin was established by the central bank PBoC in 2003 and later transferred to CIC to effectively become its domestic equity unit – although there are “strict firewalls” between Central Huijin and CIC’s overseas investment activities.  

Central Huijin acts on behalf of the central government to exercise shareholder rights in major commercial banks and other strategically important financial institutions.  

China Securities Finance was owned by major market operators such as Shanghai and Shenzhen stock exchanges, who this February collectively transferred 67 per cent of their shareholdings to Central Huijin.  

Meanwhile, SAFE operates under PBoC and manages the state foreign exchange reserves which at the end of this March amounted to $3.2 trillion, and NCSSF is a unit under the Ministry of Finance.  

Central Huijin, the NCSSF and China Securities Finance held close to 4 trillion yuan in A-shares by the end of 2024, according to estimates from Wind data. The position represented approximately 4 per cent of China’s stock market value and is likely to have increased with recent stabilisation efforts around the US tariff. These holdings also have a significant sectoral bias as close to 80 per cent are bank shares. 

The national team is an important anchor in a market like China where, according to official data, 70 per cent of equity trading is traced back to fast-moving retail money.  

“Because [the national team’s] motivation, remember, is to stabilise market, not to gain profit,” Li says, but acknowledges this could have some negative short-term effects.  

“Generally speaking, because the share price should be determined by its fundamental value like cash flows and other economic factors, the purchase of these national team investors will temporarily distort the share prices,” Li says.  

“It’s not good for the overall market because it reduces the informativeness of the share price… it contains these deliberate trading.”  

In the long term, while these rescue efforts likely do not have negative impact on A-shares – as the temporary boost from the national team will wear off and prices will revert to reflect fundamental value – it’s also hard to determine if they’ve contributed to the development of a more mature stock market or better beta, Li says. The MSCI China A index has had a zero per cent 10-year return despite volatile performance.  

Goldman Sachs’ China equity strategist Fu Si told Chinese financial press that the national team acts more as a safety net and expected the buying to slow down after the market stabilises, while a sustained market recovery needs to be driven by improvements in consumption and real estate.  

Global influence 

While short-term asset price stabilisation is important, Li suggests it needs to work with government stimulus to boost investor sentiment should the US-China economic conflict escalate.  

But the national team’s domestic influence is only part of the story as some members are prolific global investors, and there are already signals that the Chinese government is seeking to exercise the funds’ influence to exert pressure on the US.  

Some of the state-backed funds are looking to exclude private equity investments in US companies, even if they are made by investment managers based outside of the country, the Financial Times reported on Tuesday.  

CIC was among the investors reportedly pulling back from the US. The fund allocated close to half of its portfolio in alternatives at the end of 2023, which is the latest disclosure, which makes it one of the world’s largest investors in the asset class.  

It seems that the national team is an important leverage for the Chinese government to not only maintain peace in the domestic market but also fight economic war overseas if needed. With no end in sight for the tit-for-tat trade war and little willingness from both sides to negotiate, balancing the duties of global investments and national interest will be a complicated subject for these sovereign investors in the near future.  

The $34 billion Khazanah Nasional, the sovereign wealth fund of Malaysia, has been increasing its public and private equity exposure to developed markets for the past eight years.

It is a pivot away from its traditional focus on emerging markets, including its home country and other Asian economies, that was made somewhat out of necessity because underperformance in the past decade was hurting returns.

As of this March, the US accounted for approximately 40 per cent of Khazanah’s global portfolio, and it has plans to increase overall developed countries exposure to in line with the MSCI ACWI benchmark at 88 per cent.

But while the allocations are increasing chief investment officer Hisham Hamdan is very realistic about what the fund can and cannot achieve by allocating to developed markets. He sees it as sufficiently rewarded beta but not the place to look for an edge and is “spending more time on allocation, less on selection”.

“That’s one thing that I think most organisations need to ask themselves, do you really believe that you can outperform the index in efficient developed market countries?” Hisham tells Top1000funds.com, adding that it is why Khazanah prefers to access developed markets via cheaper and passive options.

As of the end of 2024, 57.5 per cent of Khazanah’s main investment portfolio was domestic public markets,17.4 per cent was global public markets, 16.5 per cent was private markets and 8.6 per cent was real assets.

In contrast, emerging markets is where Khazanah wants to take on active risks due to inefficiencies, but the problem in these countries is that higher risks and volatility haven’t been rewarded with higher return. The momentum in developing economies, which accounts for two-thirds of the world’s GDP growth, also has not translated into higher company earnings. And this creates a dilemma for investors like Khazanah located within the region.

Khazanah has traditionally had a high allocation to China, but investments in the country in particular have come under significant strain since 2021, following a slow COVID-19 recovery and the real estate market crash.

India however, where the fund also has an office, has been the bright spot in emerging markets with strong returns in public markets, Hisham says.

The last decade of emerging markets performance has been “out of whack”, Hisham says, but he still believes investing in emerging markets will bring higher returns over the long term. Khazanah itself has a role to play, as Malaysia’s sovereign wealth fund, part of its responsibilities is to invest in and help develop its domestic equity markets and promote economic activities in its home region.

So despite the momentum of the past few years, and an increasing allocation to the US and other developed markets, uncertainties in US markets supercharged by tariffs could signal an opportunity to allocate more to emerging markets, which are showing signs of rebound. Notwithstanding fear of a trade war with the US, China’s benchmark CSI 300 index has still outperformed the S&P 500 in 2025 so far.

“If you are a US-centric [allocator], chances are you are probably underweight emerging [public] markets. Maybe instead of having 12 per cent [in EM], you have 7 or 8 per cent,” Hisham says. “If you see China has done well this year, maybe it’s time for you to pivot.”

“That depends on who the fund is and where they are, but we are obviously happy to see China’s numbers coming back.”

On the private equity side, it is reducing exposure to venture capital and increasing buyout and secondaries investments. “Private equity is definitely higher active risk than public market, but the dispersion of return is wider,” Hisham says.

“Increasingly, the median return of PE is not beating the public market benchmark, it could also be because the public [market] has been very strong because of the Mag Seven.

“We always invest into an asset class, [where] if the risk is higher, you want to make sure that the risk is rewarded.”

Compared to its global sovereign wealth fund peers, Khazanah’s $34 billion of assets under management is modest, and it doesn’t have the luxury of inflows from resource revenue or access to foreign exchange reserves, but its existence is closely linked to the prosperity of the Malaysian market where the fund plays a role to improve its beta.

Hisham considers that Khazanah’s mandate could be likened to a combination of three Singaporean sovereign and state investors, GIC, Temasek and the Economic Development Board (EDB). It needs to juggle between transforming Malaysian listed companies, developing new economic sectors and bringing foreign capital into the country alongside the government, while ensuring a globally diversified portfolio and meeting return targets.

The overall Khazanah portfolio has four components. Apart from around $31.5 billion in the main investments portfolio with commercial return targets, $1.3 billion is allocated to the ‘Dana Impak’ fund which executes investments around six socioeconomic themes such as healthcare and food security; ‘developmental assets’ which are companies that Khazanah is helping to strengthen their financial sustainability; and ‘special situations’ where assets are under stress and need active management to improve profitability.

“Some of the things that we do, you don’t necessarily get the return. The return can be captured in the form of jobs that we created, in the form of new skill sets [in the economy] that we created,” he says.

“But at the same time, we have to make sure that we generate those cash returns, pay dividends to the government and take care of our balance sheet.”

The investment methodology Total Portfolio Approach (TPA) is making big waves at the moment.

Funds in large numbers are thinking about ways to make the transition to TPA with CalPERS the most prominent, as covered in Top1000funds.com recently. But the paradox is that not much money is run this way yet. My estimate is that only about one-third of the very big funds and well under 10 per cent of mid and small funds do TPA. What’s the back-story?

Strategic asset allocation (SAA) grew up in the 1980s, turning the horse-race of outperforming peers into a more intelligent race against benchmarks. It did that well but more as a comfortable arrangement that solved a governance problem than good investment design. I was there and I worked on it. This was when asset and liability management (ALM) and risk budgeting were proving their mettle which to this day are valuable tools for asset owners.

But as risk became more complex and stakeholders more demanding, it fell behind par in meeting performance goals. In short, like a lot of things, it worked well until it didn’t. And when a few brave souls in the 2000s went against it and evolved the TPA methodology, we had what looked like a better model.

Fast forward 20 years – where are we? The change has been small-scale. TPA is still in a minority position largely because it can only be implemented with a type of stretchy governance that is both very capable and nimble to make a good job of the transition an ongoing challenge. And that type of governance is in very small supply.

It hasn’t helped that the industry is conservative (that’s ok) and has an aversion to change (that’s not so good). And there has been no burning platform to mobilise change. The TPA ask is onerous and a transition to TPA needs the stars to align. On top of a change to the investment model, you need changes to the people model, risk model and governance model, and often the sustainability model too.

These multiple asks led the Thinking Ahead Institute to design the TPA scale that adds up to a TPA signature. That signature runs from the pure SAA (score 0 on TPA-scale) to pure TPA (score 5 on TPA-scale). The big asset owners interestingly are often in a hybrid model where they have some of the TPA features, but retain some of the SAA features (so they are 2 or 3 out 5). The TPA exemplars – four are often mentioned: CPP, Future Fund, NZ Super and GIC – are 4 or 5 out of 5. The benchmarking of TPA follows from these pillars.

First, in the investment model there is the goal-oriented framework moving from success as the outperformance of benchmarks to success in a scorecard centred around meeting goals in a multi-factor orientation that is systemic not fragmented

Second, in the risk model the mindset shift is from volatility and tracking error to the downside and drawdowns from the total portfolio and the risk tolerance that drives the yin and yang of risk and return. The TPA method is supported by risk measures that are wider, softer and longer than the equivalents in SAA.

Third, in the people model there must be a stronger teamwork ethos and collaborative proposition straight from the superteams playbook (see Top1000funds.com) by governing better via effective scaffolding and working smarter via better culture, T-shapedness and cognitive diversity, all motivated by a mind-set shift.

Fourth, in the governance model the best boards are strategic not investment strategy-focused, and highly tuned to speed, agility and joined-upness principles.

Finally, in the sustainability model it’s applying the joined-upness in practice – integrating risk from ESG onto the portfolio, risk from the portfolio onto the real world, and integrating their intentional impacts both short- and long-term.

There is no killer app here, but it is critical to work with some governance guidelines and guardrails to thrive in a more complex world experiencing rapid cultural evolution, technological transformation, environmental degradation and a dose of political dysfunction.

The big driver to better governance is first about basics: dependency on division of roles, comparative advantage, primacy of goals, speed of action, culture of collaboration and critically checks and balances. And second, it’s about ‘ologies’. Here the methodology, technology, futurology and anthropology are critical to making sense of the present and the future and reflecting that sense in the current portfolio.

This way of thinking aligns in the normative picture of organisational maturity captured in the scientific, speed and superteams principles spelt out in Andrew McAfee’s book, The Geek Way. The book explores how the tech industry applies those organisational principles to produce the exceptional results that the Mag Seven and others in the Silicon Valley set have achieved.

The rapid progress that geek companies have made can be traced back to organisational innovation and their high rates of learning through applying speed in all facets of the business, notably the commitment to and system for learning.

Humans do not learn primarily by studying. We learn primarily by watching the people around us, finding those who are good at what they do, and picking up on their behaviour and integrating the best bits.

The application to investors is clear: the best have the greatest intelligence processed from basic data into collective intelligence at speed and scale. And TPA works by streamlining that process.

Making the TPA transition needs this stretchy governance. Stephen Gilmore, CIO at CalPERS in his public account of their TPA plans lays out a path forward. There is no silver bullet. Just a well-ordered series of steps starting with the vision and strategy, the common purpose, the unified language, the competition for the best ideas for capital and risks, through to implementation using multiple channels, and reinforced in a culture shift. And all this shaped by a building body of experience that this is a transition worth making waves for. Because asset owners need help with a faster world that has higher stakes and considerably more uncertainty.

Roger Urwin is global head of investment content at WTW.

Scotland’s £31 billion ($41 billion) Strathclyde Pension Fund, which manages the pension assets of 288,000 local government employees in the Glasgow area, is increasing its allocation to impact to 7.5 per cent of assets under management.

The new allocation gives the internally run direct impact portfolio (DIP) an additional £1 billion to target new investments with local, ESG impact over the next five years spanning SME private credit, growth equity, infrastructure, affordable housing and renewable energy. The pension fund said measurable impacts from DIP include 177,000 tons of CO2e emissions avoided, enough to power 317,000 homes.

The boosted allocation marks the steady growth of a portfolio that Strathclyde created in 2009 with an initial £5 million investment and a capacity of just £300 million. The investor was one of the first in the Local Government Pension Scheme (LGPS) to commit explicitly to investing for impact. Most recently, the portfolio produced an annual return of 4.1 per cent. It has returned 7.6 per cent annually since 2010.

The DIP’s returns compare very favourably against Strathclyde’s overall returns, although DIP tends to lag total fund performance because of its much lower equity allocation.

In its latest committee meeting, the Strathclyde board also agreed to an increase in the minimum targeted return for individual fund proposals in the DIP allocation to 6.5 per cent from 5 per cent. The portfolio now targets investment sizes of £30 million to £100 million and plans to increase the total amount of the co-investment programme to £300 million from £200 million. It will also increase the maximum individual co-investment ticket size to £25 million.

Highest funded level ever

In another important milestone, the pension fund has just posted its highest funding level ever recorded of 147 per cent.

“The triennial actuarial valuation is always a significant milestone in the evolution of a pension fund. But the 2023 valuation of Strathclyde Pension Fund was particularly so,” it stated.

“These are not just actuarial and accounting numbers. They translate into real-world value: reductions in employer contribution rates for SPF’s employer’s whose finances are currently hard-pressed; and reassurance for the Fund’s 286,000 members (another high-water mark) that their pensions are more secure than ever even in these difficult times.”

It has also been a good year for investment returns. The pension fund has returned 9.9 per cent for the year, increasing assets under management by £2.7 billion. Ten-year investment returns are 8.5 per cent. The growth-oriented portfolio is divided between a 52.5 per cent allocation to equity, while hedging/insurance (1.5 per cent,) credit (6 per cent,) short-term enhanced yield (20 per cent) and long-term enhanced yield (20 per cent) make up the rest of the portfolio.

The fund’s strong performance also facilitated some strategy changes which the committee agreed on towards the end of last year, including a reduction in investment risk in order to add more protection against future downturns and a shift of more than £4 billion of passive equity into Climate Transition Index funds. “This marked a a big step towards making the Climate Action Plan agreed by the committee last year a reality this year,” stated the fund.

Members received a pension increase of 10.1 per cent at the start of the year and will have received a further increase of 6.7 per cent after the year end, ensuring that the value of their pension is fully protected against inflation.

Strathclyde is part of the Local Government Pension Scheme (LGPS) and is one of 11 LGPS funds in Scotland.