LGC Investment Supplement - March 2012

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I still remember the somewhat pained expression on my father’s face when I came home from sixth-form college and announced I was going to be focusing on post-1945 ‘history’ for one of my A-levels. That, of course, to him was very much living memory and, probably in fact to his mind, current affairs.

It’s much the same now for me when my children say they’re being taught about the miners’ strike or the fall of the Berlin Wall.

But if we’re going to understand the context of what’s happening around the world or politically today, and in turn even hope to anticipate or evaluate what might happen in the future - an absolutely key skill-set of course for the modern-day local government pension fund manager - then history matters.

As Warwickshire CC’s Phil Triggs has highlighted on pages 4-5 of the supplement, since the 1990s Local Government Pension Fund managers have been battered by an array of (and it has to be said increasingly frequent) crises - the bursting of the ‘dotcom’ bubble, the equity meltdown of 2003, the financial collapse of 2007-08 and now, of course, the eurozone and sovereign debt crises and LGPS reforms, to name but a few.

Each has required (or still requires) the keeping of a measured, calm, long-term perspective as much as skilled financial expertise. Similarly, as the Local Authority Pension Fund Forum’s Keith Bray writes, exactly why banks in theUK and Ireland failed in 2008 may already have been much analysed but, as time begins to give us distance, local authority pension funds, as key institutional investors, need to be ensuring the lessons from that time are well and truly learned.

Finally, what continues to be clear is that the current climate of austerity is, if anything, encouraging rather than stifling innovation.

How, or even whether, pension funds can innovate by investing in infrastructure projects is examined by London Pensions Fund Authority chief executive Mike Taylor, while Barclays’ Chris Hearn makes the point that regular review of funding sources and funding flexibility will need to remain the imperative for fund managers in the future.

After all, in challenging times the last thing any of us wants is to become an ‘object lesson’ to be pored over in the history books of the future.

Nic Paton, editor

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Expert Opinions in the Supplement Include:

Comment - Managing pension risks

Ben Clissold, senior liability driven investment manager, SSgA

Comment - Public sector investors could help fund the future of the nation

Andrew Swan, director of fixed income, M&G Investments

Social housing’s potential

Phil Redding, MD, UK institutional sales, Aviva Investors

Liquid assets’ potential

Kenneth Ettles, investment principal & actuary, Aon Hewitt