The Tesco PLC Pension Scheme’s recently published ‘Trustee’s report and financial statements’ for the year ended 31 March 2025 details a significant change in its investment management operating model and asset allocation strategy.
Investment Management Model Transition
From 1 July 2024, Schroders was appointed as the principal investment manager for the Scheme under an OCIO Investment Management agreement, replacing Tesco Pension Investment Limited (TPI). TPI acted as the principal investment manager from 1 April 2024 to 30 June 2024, with its direct property portfolio management terminating on 31 July 2024. Schroders has been granted discretion over asset allocation, subject to outlined restrictions, with monitoring by the Investment Risk Committee. (Page 9)
Equity Management Consolidation
Between July and August 2024, the Scheme’s equity investments were transitioned into a combination of actively managed portfolios under Schroders’ management and a range of equity derivatives. Prior to this, equity investments were largely managed on a passive basis. The mandates with external equity managers BlackRock (terminated 9 August 2024), Legal & General Investment Managers Limited (terminated 2 August 2024) and Los Angeles Capital Management (LACM) were concluded as part of this transition. The equity investments are now managed directly and solely by Schroders. (Page 4, 10, 46)
Strategic Asset Allocation Overview
As of 31 March 2025, the Scheme’s broad asset allocation is: LDI 29%; equities 24%; fixed income 11% (including government and corporate bonds); private equity 8%; property (direct and indirect) 8%; private credit 10%; infrastructure equity 6%; and liquidity 4%. The Scheme’s asset allocation is determined and managed based on the principles outlined in its Statement of Investment Principles, rather than using target asset allocations per asset class. (Page 9)
Consideration of Structured Equity Investments
A training session on Structured Equity investments was held during the year, indicating an exploration of this asset class. (Page 6)
Unfunded Commitments in Private Markets
As of 31 March 2025, the Scheme has unfunded commitments totaling £688 million across various private market asset classes. These include £88 million in Private Equity, £97 million in Infrastructure, £375 million in Credit, £2 million in Real Assets, and £125 million in Direct & Indirect Property. This represents a decrease from £779 million in unfunded commitments as of 31 March 2024. (Page 39)
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