Westminster Pension Fund to Divest £398M from Baillie Gifford, Reinvest in Passive Global Equity

Westminster Council's Pension Fund Committee is set to divest £398 million from the LCIV Global Alpha Growth Fund – Paris Aligned, managed by Baillie Gifford. The decision, scheduled for formal approval at a meeting on 17 July 2025, stems from concerns over prolonged underperformance and a desire to reduce growth-style bias .

The committee initially resolved to divest from the fund at a meeting on 26 June 2025, and is now considering options for reinvesting the funds into a passive global equity mandate. According to the LCIV Global Alpha Growth Fund – Paris Aligned Proposed Disinvestment and Passive Equity Options report, LGIM and BlackRock are the preferred options, aligning with London CIV pooling requirements and the Fit for the Future Consultation. ISIO, the committee's advisor, believes that both LGIM and BlackRock present feasible options to replace the Baillie Gifford mandate before the London CIV assumes management of the fund's assets.

The LCIV Global Alpha Growth Fund – Paris Aligned Proposed Disinvestment and Passive Equity Options report also notes that the BlackRock RBKC ex-Grenfell stocks mandate represents a credible option to the Committee, with its key aim being to track the wider global market capitalisation index, excluding companies connected with the Grenfell tragedy. It also states that Of the responsibly tilted products considered, the Committee may be minded to consider the BlackRock product. An allocation to BlackRock would reduce the concentration exposure to LGIM as a single manager. BlackRock is also the cheapest of the options considered and represents the least correlated option relative to the Fund's current passive mandate with LGIM.

The report pack details estimated costs associated with the disinvestment, including a spread cost of approximately £320,000 (8 basis points of assets invested) to divest from Baillie Gifford, and up to £400,000 (10 basis points of assets invested) to invest in a passive global equity. Consultant advisory costs will also be incurred.

As of 31 May 2025, the fund had a cash balance of £49.6 million at its global custodian bank account, which is being used to pay pensioner benefits and fund illiquid investments. ISIO suggests that a manager offering responsible investment tilts and screens may be more suited to the Committee's requirements, considering the Fund's Investment Beliefs policy.

The Pension Fund Committee Agenda for the 17 July 2025 meeting includes this disinvestment as a key item for discussion. Councillors Robert Eagleton (Deputy Cabinet Member - Housing), Ed Pitt Ford, Ryan Jude (Cabinet Member - Climate, Ecology, Culture and Air Quality), Maggie Carman (Deputy Cabinet Member - Adult Social Care, Supported and Specialist Housing), and Tim Mitchell are scheduled to attend.