The Trustee of the ABF Pension Scheme recently published its Statement of Investment Principles (‘SIP’) for the year to 5 April 2025, outlining key investment decisions and strategic shifts.
DB Section Shifts to Low-Dependency Strategy
For the fiscal year ending 2025, the DB Section is transitioning its investment strategy to a low-dependency portfolio. This strategy notionally divides assets into a ‘liability portfolio’ (global credit, multi-asset credit, UK property, senior private debt, LDI, and cash) and an ‘unallocated portfolio’ (equity, opportunistic private debt, and a cash buffer). The liability portfolio aims to reduce interest rate and inflation risk and generate modest returns, while the unallocated portfolio seeks additional risk-adjusted returns. The target allocation to the liability portfolio will be determined to fully fund DB Section liabilities, with any excess forming the unallocated portfolio. This transition is expected to conclude over 2025, ahead of schedule, funded primarily by a reduction in equity allocation. (Source: Statement of Investment Principles, page 1, 6)
UK Property Allocation to be Sold Down
For the fiscal year ending 2025, the Trustee has decided to sell down its allocation to UK Property. The proceeds from this sale will be allocated to public investment grade credit and LDI. The full sale of the UK property allocation is expected by mid-2026. This action is intended to improve liquidity within the DB Section. (Source: Statement of Investment Principles, page 3, 5, 6, 9)
Equity Portfolio Consolidation and Manager Appointments
During the fiscal year ending 2025, the Trustee consolidated the DB Section’s equity portfolio by terminating two managers. This action was taken to de-risk the investment strategy and fund the appointment of three new public investment grade credit managers. The appointment of these new managers is expected to be implemented over 2025. (Source: Statement of Investment Principles, page 3, 6, 7)
DC Section Introduces Private Debt Allocation
Following a review of the default investment option in November 2023, the Trustee agreed to include an allocation to private debt within the Target Date Funds. This change was implemented during the Scheme year to further increase diversification within the glidepath and improve risk/reward dynamics. (Source: Statement of Investment Principles, page 5)
DC Section Self-Select Fund Range Streamlined
In February 2024, the Trustee reviewed the self-select fund options for the DC Section. As a result, a number of funds were removed to streamline the offering, while some new funds were added to address identified gaps. These changes were implemented in August 2024. (Source: Statement of Investment Principles, page 2, 5, 15)
Legacy AVC Assets Transitioned to DC Default
Effective from 1 April 2023, all legacy Unit-Linked and With Profit AVC arrangements were closed, and future contributions were redirected to the current DC section default arrangement, the AllianceBernstein Target Date Funds. In November 2024, following a detailed review, the Trustee transitioned the legacy AVC assets to the DC section default arrangements, unless members made an alternative selection. (Source: Statement of Investment Principles, page 2, 5)
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