West Midlands Pension Fund’s recently published ‘Annual Report & Accounts 2025’ details its investment activities and future intentions for the fiscal year ending March 31, 2025.
Allocation Changes Reflect De-risking Strategy
For the fiscal year 2024/25, the Fund implemented significant changes to its asset allocation, reducing liquid growth assets (equities) by £936 million. This capital was primarily reallocated to corporate bonds (liquid income assets) and stabilising assets (UK nominal and index-linked gilts). This reallocation reflects a strategy to reduce the target level of return required from the Fund’s assets to meet liabilities, thereby decreasing investment risk. The changes were part of a three-stage phased implementation plan developed in conjunction with the Fund’s investment advisors, with trading activity in 2024/25 representing the third phase (page 45).
Specifically, the Fund’s asset allocation at March 31, 2025, compared to its final targets, shows an overweight in listed equities intended to fund future allocations to private debt, infrastructure, and property. The final target allocation for developed market equity is 26.5%, down from the current 33.8%. Corporate bonds are targeted at 8.5%, up from 6.8%. Private debt is targeted at 7.0%, up from 5.0%. Infrastructure is targeted at 9.0%, up from 4.8%. Property is targeted at 9.0%, up from 6.8% (page 51).
Continued Commitment to Investment Pooling
The Fund remains committed to further pooling investment assets with other local government pension schemes to enhance efficiency, achieve better value for money, and strengthen investment governance. As of March 31, 2025, 80% of the Fund’s assets were invested with, or overseen by, LGPS Central. This includes 42% directly in LGPS Central pooled products, 18% in discretionary mandates managed by LGPS Central, and 20% overseen under an advisory agreement. The pace of completing pooling is contingent on the availability of suitable strategies and vehicles from LGPS Central (page 56).
New Asset Class Considerations: Enhanced Focus on Climate Solutions
In March 2025, the Fund published its new ‘2025 Climate Change Framework and Strategy,’ approved by the Pensions Committee. This strategy captures increased ambitions and targets, including investment in climate solutions. This reflects the Fund’s belief that climate-related risks are systemic and financially material in the long term, and that addressing climate change is a priority as part of its fiduciary duty (page 64-65).
Manager Appointments: LGPS Central Dominates Top Holdings
As of March 31, 2025, several LGPS Central funds constitute the largest holdings within the Fund’s portfolio. These include the LGPS Central All World Equity Climate Multi Factor Fund (£2,553.9 million), LGPS Central Global Ex UK Passive Equity Fund (£1,763.6 million), and LGPS Central Global Equity Active Multi Manager Fund (£1,540.3 million). These holdings represent 12.0%, 8.3%, and 7.2% of the total market value, respectively (page 58, 90).
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