Lothian Pension Fund, Edinburgh, created a £300 million ($450.9 million) in-house global equity portfolio, a spokeswoman said.
The £4.4 billion pension fund's new portfolio sits alongside two existing in-house global portfolios and focuses on valuation and volatility. The other portfolios focus on high-dividend yield and low volatility. The new portfolio was funded through reallocation from Asia-Pacific equities. The transition was managed internally last month.
Pension fund officials said in an e-mailed statement that the fund saved an estimated £200,000 in commission costs by running the transition in-house.
The statement coincided with the announcement of the pension fund's most recent actuarial valuation, as of March 31, 2014. The funding level fell to 91.3% from 96.1% on March 31, 2011, the date of the last valuation.
The deficit increased to £417 million at March 31, 2014, up 193.7% compared with the 2011 valuation. Liabilities increased 32.5% to £4.8 billion, despite a 25.9% increase in assets to £4.4 billion.
The statement added that since the 2014 valuation, investments have performed well. “However, falls in bond yields as well as the improvements in longevity have caused the funding level to fall,” it said.