Lockheed Martin Investment plans to cut external managers

The US corporate pension will reduce its 80 GPs over time but plans to increase its overall exposure to private equity.

Lockheed Martin Investment Management Company, the asset management arm of Bethesda-based advanced technology company Lockheed Martin Corporation, plans to reduce the number of relationships it has with its asset managers, Joseph Chang head of private investments, Asia said at the HKVCA Asia Private Equity Forum 2017 on Wednesday.

“We’ve reached a point where we have too many general partners in our portfolio – it cannot be everybody, it has to be top quartile – and so we will decrease these relationships over time,” Chang said.

“Going forward we plan to shrink the number of relationships we have and give each of them more capital. In our view we want high conviction managers, keep a longer term relationship with them, and also get more co-investment opportunities.”

The firm, which manages around $70 billion of assets of the Lockheed Martin corporate pension fund, has commitments to approximately 80 external fund managers globally across growth capital, venture and buyouts. Among them are Valhalla Partners, CBPE Capital, Capital International and JPMorgan Asset Management, according to PEI data.

Chang added that the pension fund also plans to “increase its current 10 percent allocation to private equity to up to 12 percent over time” in search for higher returns.

The pension fund has a $3 billion exposure to private equity globally and $1 billion in real estate, PEI data indicated.

When asked about opportunities in the Asian region, Chang said the firm has a 25 percent exposure to Asia, of which 90 percent is invested in China.

“We have been quite bearish on Europe for a number of years and it looks like it will be uncertain and complex going forward, so we like Asia as an alternative to the US,” Chang said.