LGPS pools urged to hold private assets in RIFs

LGPS pools should run private-market strategies through Reserved Investor Funds and keep the ACS for listed and liquid portfolios, according to Melville Rodrigues, the policy's chief architect.

Rodrigues, head of real estate advisory at Apex Group, sets out the case in a column for IPE Real Assets. LGPS funds hold about £95bn (€113bn) of private-market assets, about 24% of their total. Rodrigues says that makes them one of Europe's largest institutional allocators to private markets.

Managers seeking LGPS commitments should expect pool finance officials to add a total expense ratio assessment of the RIF to their evaluation of private-fund structures. Rodrigues says lower establishment and operating costs leave more return with partner funds. A proposal arriving in an ACS-based vehicle would then compete against a structure he says may cost less to run.

Like the ACS, the RIF is an unauthorised contractual scheme, tax transparent and exempt, with a segregation option and closed, open-ended, hybrid or evergreen exit terms. Its investment remit is unconstrained, and it is more lightly regulated than the ACS.

Rodrigues writes that pools can use the RIF to hold private equity, infrastructure, private credit and property for partner funds, not just UK real estate.

The ACS remains the vehicle of choice for listed and liquid portfolios. Rodrigues says it is not naturally suited to private fund strategies built on less liquid assets, development risk, joint ventures and bespoke local projects. He said: "I advocate the RIF as the natural complement to the ACS for LGPS private market strategies."

The first RIF launched in July, as Private Wealth Daily previously reported, opening with £118m of local authority and institutional capital and a £700m target.