Seeking a little privacy
“A very sophisticated approach to incorporating both liquid and illiquid alternatives and using an opportunistic approach to specialist sectors such as secondaries, venture and impact funds” judge’s comment
WINNER
Country |
Spain |
Type |
Hybrid corporate pension fund |
Members |
5,545 active, |
AUM |
€130m |
Performance |
6.33% (1yr) |
As at 31 December 2023 |
After the 2008-09 financial crisis, Bridgestone Hispania Pension (Bridgestone) saw how correlations between traditional assets had increased, making true diversification more challenging. Following extensive analysis, it decided to address this by reducing its allocation to traditional assets by diversifying into alternative investments.
In collaboration with its fiduciary manager and the investment consultant, Bridgestone thus initiated an investment programme focused on alternatives following a major strategic asset allocation revision emphasising effective portfolio construction and achieving genuine diversification.
Previously, Bridgestone’s strategic asset allocation allowed for 30% to global listed equities and 70% to global liquid bonds, but after a comprehensive review, a new target allocation of 26% in alternatives was set, divided into 22% for illiquid assets, such as private markets, and 4% for liquid strategies. Additionally, alternative assets related to credit or fixed income were increased from 6% to a projected 12%.
Initially, Bridgestone’s strategic allocation was divided equally between private equity and real estate, private debt and infrastructure. From 2023 however the fund revised these weightings, now favouring private equity with a new weight of 70%. As of 2024, Bridgestone has committed capital to 26 illiquid alternative investment funds: 11 in private equity, five in infrastructure, six in private debt, and four in real estate, representing 18.5% of its assets, with commitments totalling 25.3%. These investments have positively contributed to the fund's profitability, with a net internal rate of return of 9.6%.
Another crucial component of Bridgestone’s portfolio is alternative risk premia (ARP) strategies, and Bridgestone has created a bespoke fund to access ARP in a liquid, cost-efficient and transparent manner. This cross-asset portfolio consists of 12-15 long-short dynamically managed strategies based on value, momentum, carry, and volatility. As of 2024, Bridgestone has invested in 13 liquid alternative investment funds with diverse strategies, with this block currently representing 4% of overall assets.
STRATEGIC TAKEAWAYS
➤ Focus on alternatives after SAA revision emphasised effective portfolio construction to achieve diversification |
➤ Investments have positively contributed to the fund's profitability, with net IRR of 9.6% |
➤ Bias of 70% of alternatives portfolio in private equity since 2023 |
HIGHLY COMMENDED
Belgium’s Pensioenfonds Metaal underwent a strategic overhaul to curtail risk within its equity allocation in 2008, identifying infrastructure investments as part of the solution. A further 2020 ALM study saw the fund increase its target infrastructure investments allocation to 15%. At the end of 2023, the infrastructure investment portfolio comprised seven mandates overseen by three managers, with combined assets under management totalling €258m, representing approximately 15% overall.
Country |
United Kingdom |
AUM |
€40,094m |
Performance |
4.70% (1yr) |
The largest of the UK’s Railpen’s multi-asset pooled funds is the growth fund, which has assets of just over £20bn (€2.4bn). Initially, it achieved exposure to alternatives via fund of hedge funds strategies. However, following Railpen’s investment transformation programme in 2015, a decision was taken to exit these holdings. Railpen is now focused on what it calls ‘structural beta’ exposures, which include investments in healthcare royalties, music royalties, from which it exited in 2021, and insurance.
Judged by
Jeroen De Soete
Nereida González López
Joseph Mariathasan
Philip Menco
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