The UK's largest local government pension fund is to freeze all investments linked to Russian-based companies amid the invasion of Ukraine.

The Greater Manchester Pension Fund has written to its 375,000 members to state what action it is taking within its investment portfolio in light of worldwide sanctions being imposed on Russia.

The GMPF, which is the eleventh largest ‘defined benefit’ pension fund in the UK, is run by Tameside council and based out of Guardsman Tony Downes House in Droylsden.

It manages a fund of nearly £30 billion, which is invested across a broad spread of assets including public equity, bonds, property and alternative assets.

The fund states it has no direct Russian holdings due to ‘significant’ environmental, social and governance risks of investing in the country’s companies.

However around 0.2 per cent of the GMPF’s portfolio is connected to Russian holdings.

Following the invasion of Ukraine which began on February 24, the fund’s investment managers have frozen all existing indirect holdings in Russian-domiciled investments.

They say they recognise the ‘current lack of market for selling these assets and the fiduciary duty to act in the best interests of the fund’s members and the taxpayer’.

It comes after the Local Government Pension Scheme Advisory Board advised local government pension funds to consider the implication of sanctions targeting Russia on their portfolios.

Oldham Liberal Democrat opposition group leader Councillor Howard Sykes had called on the pension fund to ‘divest without delay’ from Russia.

“In common with so many other local people, I am sickened by what is happening on the streets of Ukraine and our own pension fund should make its feelings clear by divesting any assets it may hold in companies with Russian investments,” he said.

In its statement to members, the GMPF said: “We believe in activist engagement but only where real world outcomes can be achieved in addition to our fiduciary obligation to achieve good pension returns, and the effort needed to properly engage companies in these markets is often too difficult and hence why the fund has no direct Russian holdings.

“It is clear that Russia has placed itself outside of all international norms and there is very little appetite for anyone to trade with Russia under these circumstances and in face of international sanctions therefore, in that context, it is very hard to see how Russian investments are a sound financial investment, which whilst completely ignores the moral case, which is utterly compelling, is not something, we can usually legally take into account when considering our fiduciary duty.

“The fund’s investment managers have frozen all existing indirect holdings in Russian-domiciled investments, recognising the current lack of market for selling these assets and the fiduciary duty to act in the best interests of the fund’s members and the taxpayer.

“We note that some funds are using the word divest themselves but unless and until the current world markets and sanctions change they will only be able to freeze them.

“GMPF will as always continue to comply with all economic sanctions in force and will continue to keep the matter under active review.”