ABOUT BORDER TO COAST PENSIONS PARTNERSHIP
OUR INVESTMENT PHILOSOPHY
Our philosophy can be summarised as: • Active management adds value over the long term and enables better integration of ESG considerations. • Fully integrated and robust fundamental research provides the best means of generating superior long-term returns. • Engaging with companies as an active steward of assets, rather than excluding, is a better means of making a real difference and unlocking long-term value. • Costs are a headwind to investment performance and frequent changes in holdings or managers are detrimental to long-term returns. • Well managed businesses with strong governance, diverse Boards and a commitment to sustainability will be more resilient and more likely to generate superior financial return. • A commitment to reducing carbon emissions is essential to achieving long-term success – Border to Coast has committed to achieving net zero emissions across its investments by 2050 OUR APPROACH We design, develop, and operate investment opportunities offering our Partner Funds exposure to equities, fixed income and private markets – and we are currently designing a real estate offering. Border to Coast is responsible for the management of these investments though our in-house investment team either directly or through selecting and working with specialist external managers. EQUITIES Our equity investments provide our Partner Funds access to companies listed on public markets around the world. As an active steward of assets, we use our influence as a shareholder to engage with companies
to drive real change and unlock value. Our in-house team is responsible for the management of all our equity funds, either directly, or through selecting specialist external managers who provide exposure to particular investment styles or regions. FIXED INCOME Our fixed income investments provide our Partner Funds with a differentiated source of return to equities through government and corporate bonds, loans, debt, credit funds, and asset-backed securities. These investments are managed by our in-house team, either directly, or through the selection of external managers who provide exposure to specialist fixed income capabilities. PRIVATE MARKETS Private Markets encompasses a broad range of investment types and opportunities which includes specialist sectors or industries, such as private equity, infrastructure and private credit, which can be difficult to access through traditional public markets. Our specialist in-house team seeks to partner with a range of specialist external managers to develop a diversified, global portfolio which can offer enhanced risk-adjusted returns. OUR PARTNER FUNDS We were founded by our Local Government Pension Scheme Partner Funds to enable the pooling of their assets. They are both our customers and our shareholders. Collectively, they are responsible for the pensions of more than one million LGPS members who work for around 2,700 employers, and are ultimately funded by local taxpayers. Our work is centred on ensuring we make a difference for our Partner Funds by building a sustainable organisation that invests responsibly and effectively on their behalf.
Our purpose is to make a difference for the Local Government Pension Scheme. We seek to do this by providing cost-effective, innovative, and responsible investment opportunities that deliver returns over the long-term. This is on behalf of the more than one million LGPS members, over 2,700 employers, and the millions of taxpayers associated with our Partner Funds. We are regulated by the Financial Conduct Authority (FCA). The work Border to Coast undertakes is centred on ensuring we deliver on our purpose by building a sustainable organisation that invests in a responsible manner. WHAT DO WE DO? We were established by our Partner Funds to facilitate the pooling of their investments with the objective of improving value for money through scale, increased access to investment opportunities, and strengthened governance. Pooling gives us a stronger voice and, working collectively with our Partner Funds and across the asset owner and asset management industry, we aim to deliver cost-effective, innovative and responsible investment, thereby enabling strong, risk-adjusted, performance over the long term. Responsible investment runs through all that we do and we are an active steward of our Partner Funds’ assets. We engage with companies on their behalf to drive positive real world change in the belief that
this is the best way to both mitigate material financial risks, and unlock greater long-term value. INVESTING FOR THE LONG TERM Our investment approach is shaped by the needs of our customers, our Partner Funds. They operate open-ended defined benefit pension schemes on behalf of 2,700 employers, representing more than one million people, and ultimately backed by local taxpayers. The invested assets are intended to fund pension payments for scheme members many years into the future – in some cases into the next century. Our Partner Funds’ focus is on generating consistent returns, with an emphasis on ensuring the sustainability of the fund and maintaining stable contribution rates for employers. To deliver for our Partner Funds, we take a long-term approach to investment. We develop and operate innovative, cost-effective investment propositions that support our Partner Funds in implementing their strategic asset allocations. Gaining a deep understanding of the investments we make and the third parties we work with is crucial in managing these portfolios. In particular, we believe that environmental, social and governance (ESG) issues can have a material impact on the value of financial assets and on the long-term performance of investment portfolios, and we believe strong and sustainable investment performance is delivered through robust portfolio risk, research, and responsible investment capabilities.
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