For the Trustees of the Océ (UK) Limited Pension Scheme
- 01 Introduction
- 02 Division of responsibilities
- 03 Strategic investment policy and objectives
- 04 Responsible investment
- 05 Risk measurement and management
- 06 Realisation of assets and investment restrictions
- 07 Investment Manager Arrangements and fee structure
- 08 Additional Vountary Contribution arrangements
- 09 Compliance Statement
- Appendix I – Investment Structure
- Appendix II - Investment Manager mandates and fees
This Statement describes the investment policy of the Trustees of the Scheme and is issued by the Trustees to comply with the Act and the Regulations. It supersedes the previous Statement and has been updated following changes to the Regulations. The wording of the Statement was agreed by the Trustees in September 2020.
The exclusive purpose of the Scheme is to provide retirement benefits and death benefits to eligible participants and beneficiaries. It qualifies as a registered pension scheme, registered under Chapter 2 of Part 4 of the Finance Act 2004.
Advice and consultation
Before preparing this Statement, the Trustees have sought advice from the Scheme’s Investment Consultant, XPS Investment Limited. The Trustees have also consulted the Principal Employer. The Trustees will consult the Principal Employer on any future changes in investment policy as set out in this Statement.
The Scheme's Trust Deed and Rules sets out the investment powers of the Trustees. This Statement is consistent with those powers. Neither this Statement nor the Trust Deed and Rules restrict the Trustees' investment powers by requiring the consent of the Principal Employer.
In accordance with the Financial Services and Markets Act 2000, the Trustees set general investment policy but delegate responsibility for the selection of the specific securities and any financial instruments in which the Scheme invests to the Investment Managers.
Review of the Statement
The Trustees will review this Statement and their investment policy at least every three years in conjunction with each triennial valuation or immediately following any significant changes in investment policy. The Trustees will also review this Statement in response to any material changes to any aspect of the Scheme, its liabilities, finances and attitude to risk of either the Trustees or Principal Employer which they judge to have a bearing on the stated investment policy.
The Trustees will receive confirmation of the continued appropriateness of this Statement annually, or more frequently if appropriate.
Capitalised terms in this document mean the following:
Act - The Pensions Act 1995 (as amended by section 244 of the Pensions Act 2004);
AVCs – Additional Voluntary Contributions;
Investment Manager - An organisation appointed by the Trustees to manage investments on behalf of the Scheme;
Principal Employer – Canon (UK) Limited;
Recovery Plan - The agreement between the Trustees and the Principal Employer to address the funding deficit;
Regulations - The Occupational Pension Schemes (Investment) Regulations 2005;
Scheme – the Océ (UK) Limited Pension Scheme;
Statement - This document, including any appendices, which is the Trustees’ Statement of Investment Principles;
Technical Provisions - The amount required, on an actuarial calculation, to make provision for the Scheme’s liabilities;
Trust Deed and Rules - the Scheme’s Trust Deed and Rules, originally dated 28 September 1950 and now succeeded by the Revised Definitive Deed and Rules dated 17 November 2009, as subsequently amended;
Trustees - the collective entity responsible for the investment of the Scheme’s assets and managing the administration of the Scheme; and
Value at Risk - a technique which uses historical correlations of asset class returns and volatilities to estimate the likely worst-case scenario loss for a given portfolio of assets.
2 Division of responsibilities
The Trustees are accountable for all aspects of the Scheme’s investments. However, as permitted within the Trust Deed and Rules, the Trustees have delegated some of the decision making powers and other responsibilities as set out below.
The Trustees have retained the following responsibilities and powers for themselves:
> The content and the reviewing of this Statement.
> Reviewing the investment policy.
> Appointing the Investment Managers and (where appropriate) the Custodian(s).
> Assessing the performance and investment process of the Investment Managers.
> Consulting with the Principal Employer when reviewing investment policy issues.
> Monitoring compliance of the investment arrangements with this Statement on an ongoing basis.
In addition, the Trustees of the Scheme will make decisions relating to the Scheme’s investments, including issues such as:
> The kinds of investments to be held.
> The balance between different kinds of investments.
> The level of risk to which the Scheme is exposed
> The Investment Manager arrangements.
> The performance target of the Investment Managers.
The Investment Consultant’s responsibilities include:
> Participating with the Trustees in regular reviews of this Statement, and in the review of investment related issues as described in this Statement.
> Undertaking project work as required, including reviews of asset allocation policy and reviews or selection of Investment Managers.
> Advising the Trustees how any changes in the Scheme’s benefits, membership and funding position may affect the way in which the Scheme’s assets should be invested.
Each Investment Manager's responsibilities will include:
> Investing in diversified portfolios of assets suitable for Pension Schemes in accordance with the mandate they have been given by the Trustees.
> At their discretion, but in accordance with the mandate the Trustees have given them, implementing changes in the asset mix and selecting individual securities and financial instruments within each asset class.
> Providing the Trustees with regular portfolio valuations and records of transactions, along with a report at least annually, on actions and future intentions, and any changes to the processes, objectives and guidelines applied to their management of the Scheme’s assets to enable the Trustees to review the Investment Manager's activities.
> Exercising, where appropriate, the rights attached to the underlying shareholdings so as to protect and enhance the long-term value of a stock holding for the Scheme.
> Reporting in person at a meeting of the Trustees as requested.
Each Custodian's responsibilities include some or all of the following:
> The safekeeping of all of the assets of the Scheme.
> Providing the Investment Managers with statements as required of the assets, cashflows and schedules of transactions.
> Undertaking all appropriate administration relating to the Scheme’s assets.
> Processing all dividends and tax reclaims in a timely manner.
> Dealing with corporate actions.
For pooled assets, the custodian is invariably appointed by the Investment Managers with the above functions undertaken on behalf of the pooled fund as a whole.
Record keeping of the Scheme’s entitlement within the pooled fund is the responsibility of the pooled fund administrator or registrar.
3 Strategic investment policy and objectives
The Trustees rely on professional Investment Managers for the day-to-day management of the Scheme’s assets. However, the Trustees retain control over some investments. In particular, the Trustees make decisions about pooled investment vehicles in which the Scheme invests and AVC investment vehicles.
The Trustees' policy is to regularly review the investments over which they retain control and to obtain written advice about them when necessary. When deciding whether or not to make any new investments the Trustees will obtain written advice and consider whether future decisions about those investments should be delegated to the Investment Managers. The written advice will consider suitability of the investments, the need for diversification and the principles within this Statement. The adviser will have the knowledge and experience required under Section 36(6) of the Act.
The Trustees’ long-term objectives are:
> The acquisition of suitable assets of appropriate liquidity which will generate income and capital growth to meet, together with contributions from the Principal Employer, the cost of the benefits which the Scheme provides, as set out in the Trust Deed and Rules.
> To limit the risk of the assets failing to meet the liabilities over the long term, in particular in relation to the Technical Provisions under Section 222 of the Pensions Act 2004, by considering the Scheme’s liability profile when setting the asset allocation policy.
> To minimise the long-term costs of the Scheme by optimising the return on the assets whilst having regard to the objectives shown above.
> To adhere to the provisions contained within the Scheme’s Statement of Funding Principles.
By undertaking the investment policy described in this Statement, the Trustees expect that future investment returns will at least meet the rate of return underlying the Recovery Plan.
Following advice from the Investment Consultant, the Trustees have set the investment policy and objectives with regard to the Scheme’s liabilities and funding level.
The Trustees intend to achieve these objectives through investing in a diversified portfolio of return seeking assets (e.g. equities) and liability matching assets (e.g. bonds and cash). The Trustees recognise that the return on return seeking assets, whilst expected to be greater over the long-term than that on liability matching assets, is likely to be more volatile. A mixture across asset classes should nevertheless provide the level of returns required by the Scheme to meet its liabilities at an acceptable level of risk (of underperforming the liabilities) for the Trustees, and an acceptable level of cost to the Principal Employer.
The investment policy the Trustees have adopted is detailed in Appendix I. The specific Investment Manager mandates against which performance of the assets will be assessed are specified in Appendix II.
Range of assets
The Trustees consider that the combination of the investment policy detailed in Appendix I and the specific manager mandates detailed in Appendix II will ensure that the assets of the Scheme include suitable investments that are appropriately diversified and provide a reasonable expectation of meeting the objectives. In setting out the mandates for the Investment Managers, the Trustees will ensure that they hold a suitably diversified range of securities in each category, avoiding an undue concentration of assets.
Based on the structure set out in Appendix I, the Trustees consider the arrangements with the Investment Managers to be aligned with the Scheme’s overall strategic objectives. Details of each specific mandate are set out in agreements and pooled fund documentation with each Investment Manager. The amounts allocated to any individual category or security will be influenced by the overall benchmark and objectives, varied through the Investment Managers’ tactical asset allocation preferences at any time, within any scope given to them through asset allocation parameters set by the Trustees or governing the pooled funds in which the Scheme is invested.
The Trustees will ensure that the Scheme's assets are predominantly invested in regulated markets to maximise their security.
Investment Managers are incentivised to perform in line with expectations for their specific mandate as their continued involvement as Investment Managers as part of the Scheme’s investment strategy – and hence the fees they receive – are dependent upon them doing so. They are therefore subject to performance monitoring and reviews based on a number of factors linked to the Trustees’ expectations, including the selection / deselection criteria set out in Section 7.
The Trustees encourage Investment Managers to make decisions in the long-term interests of the Scheme. The Trustees expect engagement with management of the underlying issuers of debt or equity and the exercising of voting rights. This expectation is based on the belief that such engagement can be expected to help Investment Managers to mitigate risk and improve long term returns. As covered in more detail in Section 4, the Trustees also require the Investment Managers to take ESG factors and climate change risks into consideration within their decision-making as the Trustees believe these factors could have a material financial impact in the long-term. The Trustees therefore make decisions about the retention of Investment Managers, accordingly.
4 Responsible investment
The Trustees have considered their approach to environmental, social and corporate governance (“ESG”) factors for the long term horizon of the Scheme and believe there can be financially material risks relating to them. The Trustees have delegated the ongoing monitoring and management of ESG risks and those related to climate change to the Scheme’s Investment Managers. The Trustees require the Scheme’s Investment Managers to take ESG and climate change risks into consideration within their decision-making, in relation to the selection, retention or realisation of investments, recognising that how they do this will be dependent on factors including the characteristics of the asset classes in which they invest.
The Trustees will seek advice from the Investment Consultant on the extent to which their views on ESG and climate change risks may be taken into account in any future investment manager selection exercises. Furthermore, the Trustees, with the assistance of the Investment Consultant, will monitor the processes and operational behaviour of the Investment Managers from time to time, to ensure they remain appropriate and in line with the Trustees’ requirements as set out in this Statement.
As the Scheme invests in pooled funds, the Trustees acknowledge that they cannot directly influence the policies and practices of the companies in which the pooled funds invest. They have therefore delegated responsibility for the exercise of rights (including voting rights) attached to the Scheme’s investments to the Investment Managers. The Trustees encourage them to engage with investee companies and vote whenever it is practical to do so on financially material matters such as strategy, capital structure, conflicts of interest policies, risks, social and environmental impact and corporate governance as part of their decision-making processes. The Trustees require the Investment Managers to report on significant votes made on behalf of the Trustees.
If the Trustees become aware of an Investment Manager engaging with the underlying issuers of debt or equity in ways that they deem inadequate or that the results of such engagement are mis-aligned with the Trustees’ expectation, then the Trustees may consider terminating the relationship with that Investment Manager.
When considering the selection, retention or realisation of investments, the Trustees have a fiduciary responsibility to act in the best interests of the beneficiaries of the Scheme, although they have neither sought nor taken into account the beneficiaries’ views on matters including (but not limited to) ethical issues and social and environmental impact. The Trustees will review this policy if any beneficiary views are raised in future.
5 Risk measurement and management
The Trustees recognise a number of risks involved in the investment of the assets of the Scheme. The Trustees measure and manage these risks as follows:
Solvency risk and mismatching risk - The risk that the assets do not respond to market changes in the same way as the liabilities, resulting in volatility in the funding position, is addressed through the strategic asset allocation and through ongoing triennial actuarial valuations. In setting the investment strategy, the Trustee will consider (for example) the Value at Risk.
Strategy risk - The risk that the Investment Managers’ asset allocation deviates from the Trustee’s investment policy is addressed through regular review of the asset allocation and/or the imposition of investment ranges as described in Appendices I and II. In reviewing the investment strategy on a periodic basis, the Trustees will consider the current economic factors affecting the asset classes in which they are invested and the short to medium term outlook for performance by reference to e.g. current and historic yields, GDP growth forecasts and other relevant factors. The Trustee will also consider how far the actual asset allocation has drifted from the strategic asset allocation and take action to rebalance if necessary.
Liquidity risk - The risk that assets cannot be sold quickly enough to enable benefits to be paid or that the Trustee cannot exit a particular investment is addressed through the process by which the administrator estimates the monthly benefit outgo and ensures that sufficient cash balances are available, and through the Trustee’s policy on realisation of assets (see below).
Inappropriate investments - The risk that an Investment Manager invests in assets or instruments that are not considered to be appropriate by the Trustees is addressed through the Trustees’ policy on the range of assets in which the Scheme can invest (see section 3).
Counterparty risk – The risk that a third party fails to deliver cash or other assets owing to the Scheme is addressed through the Investment Managers’ guidelines with respect to cash and counterparty management e.g. using a diverse range of counterparties and the daily posting of collateral of a high credit rating (e.g. gilts or bank deposits).
Custodian risk - The risk that the custodian fails to provide the services expected is addressed through the agreement with the third party custodian and ongoing monitoring of the custodial arrangements. In pooled arrangements this is invariably delegated to the Investment Managers.
Fraud/Dishonesty – The risk that the Scheme assets are reduced by illegal actions is addressed through restrictions applied as to who can authorise transfer of cash and the account to which transfers can be made.
Manager risk - The risk that an investment manager fails to meet their stated objective is addressed through the performance objectives set out in Appendix II and through the ongoing monitoring of the managers as set out below and in Section 7. In monitoring the performance of the Investment Managers the Trustees measure the returns relative to benchmark and objective and the volatility of returns. In addition, the Trustees will regularly review each Investment Manager's approach to risk within each fund in order to highlight any unintended risk being taken. For example:
> For Liability Driven Investment (LDI) funds, the Trustees will review risk through the type of instruments held and the risks associated with these investments;
> For other bond/credit investments, the Trustees will review the risks of the underlying assets comprising the bond portfolios. For example, the Trustees will consider weightings to specific stocks and sectors;
> For equities, the Trustees will consider the spread of assets across various geographic and industry sectors, the concentration of investments in individual stocks and the active positions taken by the investment managers;
> For multi asset funds, the Trustees will consider the weightings within the fund to different asset classes, and will also consider the volatility of the fund both in absolute terms and in comparison to the volatility of traditional equity markets. The Trustee will also review how the fund operates within its own defined risk controls and limits.
> For illiquid assets, the Trustees will consider the spread across different types of investment (e.g. equity or debt) and the diversification across different corporate entities. They will take into account the expected additional return from investing in private as opposed to quoted markets whilst having regard to the liquidity of the investment vehicle, any lock-in periods and the time it may take to realise assets.
Political risk - The risk of an adverse influence on investment values from political intervention is reduced by diversification of the assets across many countries.
6 Realisation of assets and investment restrictions
Realisation of investments
In recognition of the fact that funds may need to be realised for a number of unanticipated reasons at any time, and the desirability of retaining as high a degree of flexibility as possible to cater for unexpected changes in circumstances, the Trustees will monitor closely the extent to which any assets not readily realisable are held by the Investment Managers and will limit such assets to a level where they are not expected to prejudice the proper operation of the Scheme.
The Trustees have considered how easily investments can be realised for the types of assets in which they are currently invested. As such, the Trustees believe that the Scheme currently holds an acceptable level of readily realisable assets. The Trustees will also take into account how easily investments can be realised for any new investment classes they consider investing in, to ensure that this position is maintained in the future.
The Trustees will hold cash to the extent they consider necessary to meet impending anticipated liability outflows. A bank account is used to facilitate the holding of cash awaiting investment or payment.
The Trustees have established the following investment restrictions:
> The Trustees may not hold in excess of 5% of the Scheme’s assets in investments related to the Principal Employer.
> Whilst the Trustees recognise that borrowing on a temporary basis is permitted, this option will only be utilised where it is deemed absolutely necessary or where the Trustees have received advice from the Investment Consultant that the Scheme’s overall exposure to risk can be reduced through temporary borrowing, e.g. during an asset transfer.
> Investment in derivative instruments may be made only insofar as they contribute to the reduction in risk or facilitate efficient portfolio management.
The Investment Managers impose internal restrictions that are consistent with their house style. In some instances the Trustees may impose additional restrictions and any such restrictions are specified in Appendix II.
7 Investment Manager Arrangements and fee structure
Delegation to Investment Manager(s)
In accordance with the Act, the Trustees have appointed one or more Investment Managers and delegated to them the responsibility for investing the Scheme’s assets in a manner consistent with this Statement.
The Investment Managers are authorised and regulated to provide investment management services to the Scheme. Within the UK, the authorisation and regulation of the Investment Managers falls under the Financial Conduct Authority (FCA). Specific products in which the Scheme invests may also be regulated by the Prudential Regulatory Authority (PRA). For non-UK Investment Managers, authorisation and regulation is undertaken by the home state regulator.
Where Investment Managers are delegated discretion under section 34 of the Pensions Act 1995, the Investment Managers will exercise their investment powers with a view to giving effect to the principles contained in this Statement so far as reasonably practicable. In particular, the Investment Managers must have regard to the suitability and diversification of the investments made on behalf of the Scheme.
The Investment Managers will ensure that suitable internal operating procedures are in place to control individuals making investments for the Scheme.
The individual benchmarks and objectives against which each Investment Manager mandate is assessed are given in Appendix II.
Appointments of Investment Managers are expected to be long-term, but the Trustees will review the appointment of the Investment Managers in accordance with their responsibilities. Such reviews will include analysis of each Investment Manager's performance and processes and an assessment of the diversification of the assets held by the Investment Manager. The review will include consideration of the continued appropriateness of the mandate given to the Investment Manager within the framework of the Trustees' investment policy.
The Trustees receive quarterly performance monitoring reports from the Investment Consultant which consider performance over the quarter, one and three year periods. In addition, any significant changes relating to the Trustees' selection and deselection criteria that the Investment Consultant is aware of will be highlighted, which may lead to a change in the Investment Consultant’s rating for a particular mandate. These ratings help to determine an Investment Manager’s ongoing role in implementing the investment strategy. If there are concerns, the Trustees may carry out a more in-depth review of a particular Investment Manager. Investment Managers will also attend Trustees meetings as requested.
The Investment Consultant has also carried out a review of how well ESG factors are incorporated into each Investment Manager’s processes and the Trustees will re-assess progress on ESG issues periodically.
Fund manager remuneration is considered as part of the manager selection process. It is also monitored regularly with the help of the Investment Consultant to ensure it is in line with the Trustees’ policies and with fee levels deemed by the Investment Consultant to be appropriate for the particular asset class and fund type.
Selection / Deselection Criteria
The criteria by which the Trustees will select (or deselect) the Investment Managers include:
> Parent - Ownership of the business;
> People - Leadership/team managing the strategy and client service;
> Product - Key features of the investment and the role it performs in a portfolio;
> Process - Philosophy and approach to selecting underlying investments including operational risk management and systems;
> Positioning - Current and historical asset allocation of the fund;
> Performance - Past performance and track record;
> Pricing - The underlying cost structure of the strategy;
> ESG – Consistency and extent to which ESG analysis is incorporated into the process of selecting underlying investments.
An Investment Manager may be replaced, for example (but not exclusively), for one or more of the following:
> The Investment Manager fails to meet the performance objectives set out in Appendix II.
> The Trustees believe that the Investment Manager is not capable of achieving the performance objectives in the future.
> The Investment Manager fails to comply with this Statement.
Investment Managers’ fee structure
The Investment Managers are remunerated by receiving a percentage of the Scheme’s assets under management. In addition, a performance related fee may be payable. Details of the fee arrangements in place for each Investment Manager are set out in Appendix II.
It is felt that this method of remuneration provides appropriate incentives for the Investment Managers to target the agreed level of outperformance whilst adhering to the level of risk specified by the Trustees.
The Trustees require the Investment Managers to report on actual portfolio turnover at least annually, including details of the costs associated with turnover, how turnover compares with the range that the Investment Manager expects and the reasons for any divergence.
Investment Consultant’s fee structure
The Investment Consultant is remunerated by a combination of fixed fees and work completed on a project-fee or time-cost arrangement.
It is felt that this method of remuneration is appropriate because it enables the Investment Consultant to provide the necessary advice and information to facilitate the Trustees undertaking their responsibilities as described in Section 2.
8 Additional Voluntary Contribution arrangements
Provision of AVCs
In In the past, the Scheme provided a facility for members to pay additional voluntary contributions (AVCs) to enhance their benefits at retirement. Since the Scheme is now closed to future accrual, no new contributions can be made in respect of AVCs. However, members who paid additional voluntary contributions in the past retain investments in respect of those contributions.
Members were offered a choice of funds in which to invest their AVC payments. The Trustees’ objective was to provide vehicles that enabled these members to generate suitable long-term returns, consistent with their reasonable expectations.
The Trustees considered that, in making a number of funds available, they provided members with sufficient options to meet their reasonable expectations.
The investment funds are provided by Utmost and Clerical Medical.
Historically AVC’s were provided by Equitable Life. As of 1 January 2020, all assets previously held in Equitable Life policies were transferred to Utmost. The unitised holdings were transferred immediately to equivalent funds. After an initial transition period of 6 months in which the proceeds were held in cash, assets transferred in respect of with profits policies were invested into the funds in the Utmost default arrangement.
The appointment of the AVC providers and the choice of AVC funds offered to members will be reviewed by the Trustees in accordance with their responsibilities, based on the result of its monitoring of performance and process. Every year, or earlier if appropriate, the Trustees will review the appointment of the AVC providers in the light of their performance.
Performance of the AVC providers will be measured relative to the individual benchmarks and objectives for the funds offered and/or to other providers offering similar fund options as measured in industry AVC surveys.
9 Compliance Statement
Confirmation of advice
Before a Statement of Investment Principles, as required by the Pensions Act 1995, is prepared or revised by the trustees of a pension scheme, they must have consulted with the principal employer and obtained and considered the written advice of a person who is reasonably believed by it to be qualified by his ability in and practical experience of financial matters and to have the appropriate knowledge and experience of the management of the investments of such schemes.
The Investment Consultant hereby confirms to the Trustees that they have the appropriate knowledge and experience to give the advice required by the Act.
On behalf of XPS Investment Limited:
FFA Partner – Investment
The Trustees confirm that this Statement of Investment Principles reflects the Investment Strategy they have decided to implement. The Trustees acknowledge that it is their responsibility, with guidance from the Investment Consultant, to ensure the assets of the Scheme are invested in accordance with these Principles.
On behalf of the Trustees:
Appendix I - Investment Structure
The Trustees have adopted a strategy where assets are invested in liability driven investments (LDI) along with growth assets (equities, multi asset, fixed income and private market funds).
The Trustees believe that the investment risk arising from the investment strategy is consistent with the overall level of risk being targeted and in-line with their long term investment objectives. The Trustees have identified the following structure as appropriate to meet the objectives of the Scheme:
- Liability Driven Investment (“LDI”)
- Equity Linked LDI
- Multi Asset
- Illiquid Assets
Liability Matching assets
The Scheme invests in leveraged LDI funds to provide a partial hedge against the Scheme’s interest rate and inflation sensitivities. These assets are leveraged in order to increase the degree of hedging provided by these assets. The target level of liability hedging is 100% of funded liabilities.
The leveraged nature of these funds means that there is an expectation that additional collateral will be required to be paid into these funds from time to time (and any excess collateral repaid to the Trustees). Where any additional collateral payments are required it is the Trustees’ intention that these will be met through disinvestments from Scheme’s assets. Any distributions are initially paid into the BMO Sterling Liquidity Fund.
Return Seeking assets
In order to achieve the required rate of investment return the Trustees have decided to invest in a range of return seeking asset classes. These are currently accessed through equities, multi asset funds, credit funds and illiquid assets.
The multi asset funds are expected to provide a long term return similar to equities but with a lower degree of volatility. The credit funds are expected to provide a further reduction in volatility albeit at a lower expected return than equities. The illiquid assets are invested in a diversified range of private markets (equity, credit, real estate and infrastructure) and are expected to provide a higher return than a similar investment in quoted markets due to their illiquidity premium.
Rebalancing and cashflow
The Trustees review the asset allocation on a periodic basis to ensure that the Scheme assets are allocated in a manner that is consistent with the objectives as detailed in this Statement.
There is no automatic rebalancing back to the strategic allocation, however the Trustees will periodically review the position and take action to rebalance if considered appropriate. The Trustees may invest contributions into the BMO Sterling Liquidity Fund instead of or ahead of taking any rebalancing action.
Appendix II - Investment Manager mandates and fees
BMO Global Asset Management
Nominal Dynamic LDI Fund
Benchmark : Leveraged Liability Benchmark - Gilts
Objective : To provide liability hedging by offering interest rate protection which replicates the liability profile of a typical UK defined benefit pension scheme.
Short Profile Real Dynamic LDI Fund
Benchmark : Leveraged Liability Benchmark - Gilts
Objective : To provide liability hedging by offering interest rate protection and inflation protection which replicates the liability profile of a typical UK defined benefit pension scheme.
Equity-Linked Real Dynamic LDI Fund
Benchmark : Leveraged Liability Benchmark Gilts plus an equity overlay
Objective : To provide exposure to global equities, and hedge against changes in interest rates and inflation expectations
Sterling Liquidity Fund
Benchmark : GBP 7 Day LIBID
Objective : To maintain high levels of liquidity, preserve capital and generate a return in line with the benchmark.
Legal and General
Active Corporate Bond - Over 10 Year - Fund
Benchmark : iBoxx £ Non-Gilt Over 10 Year Index
Objective : To outperform the benchmark by +0.75% p.a. (gross of fees) over rolling three year periods. Mid/Offer spread: 0.46%
Core Plus Fund
Benchmark : iBoxx £ Non-Gilt All Stocks Index
Objective : To outperform the benchmark by +1.15% p.a. (gross of fees) over rolling three year periods.
LF Ruffer Absolute Return Fund
Benchmark : n/a
Objective : Primarily to preserve capital, as well as to grow the portfolio at a higher rate (net of fees) that could reasonably be expected from depositing the cash value with a reputable UK bank.
Insight Broad Opportunities Fund
Benchmark : GBP 3 Month LIBID
Objective :To outperform the benchmark by 4% p.a. (net of fees).
Twenty Four Asset Management
Absolute Return Credit Fund
Benchmark : n/a
Objective : To achieve a positive absolute return in any market environment over a period of 3 years. For comparison purposes, a comparator of GBP 3 Month LIBOR + 2.5% p.a. (net of fees) is used.
Payden & Rygel
Absolute Return Bond Fund
Benchmark : GBP 1 Month LIBOR
Objective : To outperform the benchmark by +3% p.a.(net of fees) over a rolling 3-year period, whilst looking to generate growth with reduced volatility.
The Partners Fund
Benchmark : n/a
Objective : To achieve capital growth over the medium to long-term by investing in various alternative asset classes and/or alternative investment strategies. The fund targets a return of 8-12% p.a. net of all fees (in GBP) over a full market cycle.
XPS Pensions Consulting Limited, Registered No. 2459442.
XPS Investment Limited, Registered No. 6242672.
XPS Pensions Limited, Registered No. 3842603.
XPS Administration Limited, Registered No. 9428346.
XPS Pensions (RL) Limited, Registered No. 5817049.
Trigon Professional Services Limited, Registered No. 12085392
All registered at: Phoenix House, 1 Station Hill, Reading, RG1 1NB.
XPS Investment Limited is authorised and regulated by the Financial Conduct Authority for investment and general insurance business (FCA Register No. 528774).