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Asset Allocation

BAE Systems Outsources Management of 2 UK Pension Funds to Goldman Sachs

At 23 billion pounds, the OCIO mandate is the largest in UK history, according to the asset manager.

By Michael Katz




The trustees of two U.K. defined benefit pension funds sponsored by aerospace giant BAE Systems plc have outsourced the management of approximately 23 billion pounds ($28.76 billion) in assets to Goldman Sachs Asset Management.

According to the asset manager, the mandate is the largest outsourced CIO appointment made in the U.K.   

According to BAE Systems, its in-house investment management team will join Goldman Sachs Asset Management while continuing to provide investment services to the BAE Systems Pension Scheme and BAE Systems Executive Pension Scheme. The management of the assets, as well as the asset management team, is expected to transition to Goldman Sachs toward the end of this year.  

“The pension funding level has moved from a significant deficit to a surplus,” BAE Systems Group Finance Director Brad Greve said in a release. “As we continue to look at ways to further de-risk pension liabilities, reducing the cost and improving the efficiency of asset management are essential.”

Greve added that “this move doesn’t limit BAE Systems’ flexibility in exploring further ways of reducing our pension risk and we’ll continue to be dynamic in managing this risk going forward.”

BAE Systems expects the agreement to deliver performance and cost benefits for the two pension funds due to greater scale and efficiency under Goldman Sachs, which supervises more than $2.7 trillion in assets. BAE Systems also stated that the decision to tap Goldman Sachs as its OCIO followed a “highly competitive” tender process.   

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Goldman Sachs Asset Management claims to be the second largest OCIO manager in the world, with more than 200 billion pounds in assets under supervision. According to the firm, the mandate also adds to the approximately 175 billion pounds it manages in liability-driven investing and cashflow-driven investing portfolios.

In recent years, other large U.K. employers outsourced their pension investing. Early in 2023, the Royal Mail Pension Plan outsourced nearly 11 billion pounds in pension assets to BlackRock. Last year, energy services company Centrica’s pension funds transferred 10 billion pounds in assets to Schroders, while in 2021, British Airways transferred 21 billion pounds in assets from two pension funds, also to BlackRock.

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Home > News > Market Moves > Why September, Usually the Lousiest Month, May Portend a Good Finish for 2023
Market Moves

Why September, Usually the Lousiest Month, May Portend a Good Finish for 2023

When double-digit market growth precedes the 9th month, good things tend to follow for investors, according to LPL and BofA.

By Larry Light




Historically, September is the worst month for stocks, with the weakest performance of any month since 1945, according to CFRA Research. What’s more, bad stuff tends to happen in the ninth month: The September 11, 2001, terrorist attacks and the 2008 collapse of Lehman Brothers, which triggered a global financial crisis, are the most prominent examples.

But there is a big exception to September’s bad rep: when the S&P 500 has gained 10% or more for the year through August, the next month does well. So does the rest of the year.

That 10% threshold has been exceeded in 2023, with the index finishing last month up 17.6% year-to-date. In such a case, since 1945, the benchmark has averaged a 7.6% gain for the balance of the year, Bank of America research found. If so, the S&P 500 would end the year at a level of 4,849, up 26.4% for the year and exceeding the all-time high of 4,796, set on January 3, 2022.

As for September itself, LPL Financial calculated that, since 1950, the month enjoyed an average 0.6% gain if the index was up 10% or above through August. That is almost as much as the average 0.7% return for all months.

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As Adam Turnquist, LPL’s chief technical strategist, wrote in a research note, “when the market is trending higher and up double-digits on the year, such as this one, September has historically not been as bad.”

To be sure, any number of factors could sour stocks going forward. Much of this year’s advance has been powered by the Magnificent Seven tech stocks (Apple, Microsoft, Alphabet, etc.), but depending upon such narrow leadership is chancier than a much broader breadth would offer.

Further, as of mid-year, the S&P 500 has had three consecutive negative quarters, with 2023’s April-through-June period dropping 4.1% year-over-year by the count of FactSet Research Systems. Plus, the index is pricey, with a forward 12-month price/earnings multiple of 18.8.

August marked a backsliding from the propulsion the market has enjoyed throughout 2023: Last month, the S&P 500 slipped 1.8%. Whether that is a temporary interruption remains to be seen. In the two trading days thus far in September, Friday was up 0.17% and Tuesday was down 0.42%.

Not everyone is buying the upbeat prospect from the September scenario. In a Reuters survey of 41 market strategists, the median  forecast was that the S&P 500 would advance 2.2% since its Monday close to year-end. Higher inflation and interest rates would be obstacles to any better results, in their view.

LPL’s Turnquist takes the sanguine view, writing: “While history may not repeat, bullish momentum this year suggests September may not be as bad as the headlines suggest.”

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