Scottish Friendly says the majority of its £355m life fund is to be outsourced to Legal & General, with around £230m in tracker funds linked to the all-share index, the all-stocks gilts index and several foreign equity indices.
The remainder of the life fund is invested in a number of specialist investment funds aimed at adding value to the core index-tracking strategy. These include existing holdings in several property funds and new investments into specialist equity funds run by fund manager Colin McLean's SVM and Edinburgh Partners, recently launched by Sandy Nairn.
Scottish Friendly's Oeic funds, currently valued at £15m, are also to be managed by SVM.
Chief executive Bob Thomson says a strategic review of its operations earlier this year concluded that the outsourcing of its fund management, with a significant proportion inves-ted in tracker funds, offered the best long-term prospects for policyholders.
Scottish Friendly's management says it was attrac-ted to the big volume of tracker funds managed by L&G which it believes offers less chance of deviation from index performance and reduces the risk of underperformance.
L&G marketing director Michael Hayden says: “I am delighted to welcome Scottish Friendly as a client. We look forward to a long lasting and successful relationship with them.”
SVM fund manager Colin McLean says: “My priority is to deliver the best poss-ible investment returns to Scottish Friendly and its customers who have inves-ted in these funds directly and through Isas.”