The BT Pension Scheme (BTPS), the UK’s largest pension fund with £36.7bn ($57.5bn) in assets, has carved out a new 5% allocation ($2.82bn) to emerging market bonds, revealed chairman Paul Spencer in the fund’s recently published annual report.
In 2010 the BTPS Trustee Board adjusted its target allocations for all major asset classes, increasing the fixed interest portion of the portfolio by 2%. Over the year, the trustees implemented a tactical change to the fixed income portfolio by reducing the government bond allocation and adding emerging market bonds as a new asset class, which will be invested over the long term, according to the report. The pension fund also made an initial £230m allocation to emerging market credit in December 2010, which is part of the 21% alternatives portfolio, which also includes commodities, infrastructure, hedge funds, private equity and credit opportunities.
BTPS’s overall return for 2010 was 11.8%, beating its strategic benchmark by 1.1%. The pension fund is managed by BT Pension Scheme Management Limited (BTPSM), the executive arm to the trustee providing investment asset allocation advice, fund manager selection and monitoring, risk and liability management, policy and regulation.
BTPSM was formerly known as Hermes Pension Fund Management Limited, a 100% subsidiary of Hermes Fund Managers.
