The NSW Local Government Superannuation Scheme (LGSS) has allocated more than $700 million in new fixed income mandates while beginning a review of its $1 billion international equities portfolio.
Following a review, the $6 billion fund chose to reduce risk and investment manager costs by placing its $600 million domestic fixed income allocation, previously managed by FuturePlus, in a passive product run by State Street Global Advisors (SSgA).
Craig Turnbull, chief investment officer at LGSS, said the fund considered appointing an active manager instead but found few managers that could reliably outperform.
The fund retained PIMCO as one of its international bond managers, but terminated a mandate with Loomis Sayles & Co. and again appointed SSgA to a passive $110 million international fixed income mandate.
“We had a lot of exposure to credit-related investments across the international portfolio,” Turnbull said.
“We’re taking on risk in other areas.”
LGSS would save $1.1 million in fees by implementing the passive products, he said.
Meanwhile the fund began a review of its international equities portfolio in recent weeks, Turnbull said, and was determining how much it aimed to allocate to active and passive managers and to developed and emerging markets.