Episode summary
Rachel Elwell, V3 [PRIVATE ADVANCE COPY]
Money Maze Podcast
· · 56 min · Guests: Rachel Elwell
![Rachel Elwell, V3 [PRIVATE ADVANCE COPY] – Money Maze Podcast](https://i.ytimg.com/vi/LuiO2Q9NHEU/hqdefault.jpg)
Summary
Rachel Elwell argues that the value of fixed-income active management lies in understanding downside risk, not just chasing short-term benchmark outperformance. She says passive fixed income can be misleading because it can concentrate exposure to the most indebted issuers, and that after decades of benign credit markets investors have forgotten that credit is not a free lunch.
A major theme is the transformation of the UK local government pension scheme into pooled asset platforms, with Border to Coast positioned at the center of that shift. Elwell explains that the LGPS is about £400 billion in total, has nearly 7 million members, and is moving toward a model where partner funds set strategy while Border to Coast implements it, oversees reporting, and builds in-house capabilities. She says the 2030 strategy was signed off in August 2024 and brought forward by the government’s April 2026 timetable.
She also makes the case for selective UK investment and for a blended approach to private credit, active management, and outsourcing. Border to Coast is investing in UK real estate, inflation-linked gilts, equities, credit, and a UK opportunities fund aimed at regeneration, SMEs, and new energy. Elwell says the real job is managing risk, costs, operational complexity, and talent while preserving long-term value for members and local taxpayers.
Key takeaways
- Elwell says passive fixed income needs more thought because it can leave investors exposed to the most indebted issuers and hidden credit risk.
- Border to Coast now serves 18 partner funds after consolidation, and its 2030 strategy was signed off in August 2024 and accelerated to April 2026.
- She says the LGPS is about £400 billion overall, nearly 7 million members strong, and more than 100% funded on the whole.
- Elwell argues that UK allocations should support sterling liabilities and can include UK real estate, index-linked gilts, equities, credit, and private markets.
- She says outsourcing vs insourcing should be decided by risk, resources, and capability, not just by cost.
- Elwell’s view is that the biggest danger in investing is often risk aversion, not risk taking.
Notable quotes
“the value from active management on fixed income comes from really understanding what are your risks when it goes wrong”
“We've had a very benign credit environment for several decades now. And I think sometimes people forget that it's not a free lunch”
“passive for fixed income needs a lot more thought”
How the episode opens
The value from active management on fixed income comes from really understanding what are your risks when it goes wrong. We've had a very benign credit environment for several decades now and I think sometimes people forget that it's not a free lunch and so I I think passive for fixed income needs a lot more thought. The LGPS is uh still heavily invested in the UK.
So about 30% of the LGPS is invested in the UK in in different asset classes which given that the LGPS is about 400 billion is quite a lot of money. We invest in UK real estate some index link guilts, UK equities, uh UK credit. We have uh over the last few years in particular started to really work with our partner funds to focus on investing in the UK and private markets.
As we learned from our interviews with Ontario Teachers and the Australia Future Fund, the consolidation of pension assets into sizable pools can offer scale, access, and reach as well as much needed capital for the domestic economy. They offer the potential to act with a very long-term horizon as long-term true asset owners and to unlock investment opportunities that individual funds might struggle to access alone. Today in the UK, one of the most consequential organizations in UK pensions is border to coast.
They sit at the center of one of the most significant shifts in UK institutional investing in a generation and oversee over 100 billion of local authority assets. to understand the investment approach, the motivation, the challenges, and the opportunities such scale bring. We're delighted to welcome Rachel, CEO of Border to Coast.
Rachel, it's taken us nearly an year to pin you down, but you're here. Welcome.
Thank you. It's brilliant to be here.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- active vs passive fixed income
- fixed income risk
- uk pension investing
- lgps allocation
- pension fund scale and consolidation
Companies and tickers mentioned
- Border to Coast
- Ontario Teachers
- Australia Future Fund
Watch the episode
Watch “Rachel Elwell, V3 [PRIVATE ADVANCE COPY]” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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