The Strathclyde Pension Fund, Glasgow, Scotland, approved allocating £200 million ($285 million) to £300 million to emerging markets debt.
Richard Keery, investment manager at the £16 billion pension fund, said in an e-mail that no decisions have been made on the timing for any search for managers to run the investment, as there is not yet a decision on how to implement the allocation.
Mr. Keery said the pension fund does not have a direct emerging markets debt allocation now. He added that the new allocation is the final piece of the first part of a multistage strategic shift from equities to enhanced yield, both mid- and long-term. The pension fund has been working on this shift for the past year.
A spokesman for Glasgow City Council added in a separate e-mail that emerging markets debt “is attractive because it offers some diversification and also good relative value. While returns from most classes are expected to be low in the current environment, EMD is one of a number of strategies that can provide reasonable absolute returns.”
Meeting documents also said the pension fund committee approved a proposal to reduce asset allocation to gilts, and to increase allocations to U.K. and U.S. credit. The spokesman said the fund is reducing the gilts allocation to zero, from less than 1%, and reinvesting in credit. He said the fund already has some U.K. credit, but is now adding U.S. to that for the first time.