In brief: Under the hood of an LGPS local impact strategy

Greater Manchester Pension Fund has committed over £1.3 billion (€1.5 billion; $1.58 billion) to local impact investment strategies, according to a new report produced in collaboration with The Good Economy.

The report marks the first time that a UK pension fund has “reviewed and reported on the impact performance of its local investment”, according to a statement, and contains details of GMPF’s local impact investments to date. Some key points to note:

• GMPF has committed 4.5 percent of its £30 billion total allocation to local impact, which amounts to £1.36 billion. A total of £858.7 million had been drawn down and invested. This is split across the Impact Portfolio (51 percent), a multi-asset-class strategy focused on job creation and “place-making”, and The Greater Manchester Property Venture Fund (49 percent), a property-focused strategy that seeks to create sustainable employment and advance local development.
• Two-thirds of these investments (67 percent) are focused on Greater Manchester and the North West, with the rest invested across the UK.
• The internal rate of return performance of Impact Portfolio funds exited to date is 8.5 percent and 6.5 percent for GMPVF investments. GMPF has set a benchmark of four percent.

The Good Economy also provided recommendations on how GMPF can maximise the potential of its impact offering. These were:

• Increase its allocation to social and affordable housing.
• Focus more on skill development and job opportunities for young people, particularly in Greater Manchester’s priority sectors such as manufacturing.
• Alter its approach to renewable energy and social infrastructure investment by collaborating with other investors to directly address the region’s issues.
• Encourage GPs to develop place-based impact approaches.