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5 / May / 2017

LGPS pooling: cost saving whilst maintaining performance

Amid an ever sharper focus on cost saving in the real estate industry, investors are pushing for increased transparency to better understand the true costs of investing in the sector. While a global trend, the issue has been specifically highlighted here in the UK by the Local Government Pension Scheme (LGPS) pooling process. The process is well underway and the national government is closely monitoring the pools’ progress and the associated costs that are being incurred.

We share some of the UK property industry’s wider concerns about the negative impacts of these transition costs that the pooling will create. The complex and largely unknown nature of the process means the costs are likely to have been underestimated, particularly in respect of the property exposure. However, the intention behind this process remains well founded and DTZ Investors has been employing a similar strategy as a house for many years when transitioning and repositioning our clients’ indirect investment portfolios.

In this brief snapshot, we discuss the difference in costs between indirect investment and direct investment into the property sector; explain when and how indirect investment can be used to deliver outperformance; and detail our track record of successfully transitioning and growing an indirect portfolio to a direct portfolio whilst delivering sustained outperformance relative to market benchmarks despite the negative impact of transaction.