UK - The £1.2bn Environment Agency Pension Fund is tendering for managers to run mandates worth £400m, in a move from balanced to specialist investment management.
The remaining assets, worth £820m, are also expected to be put up for tender shortly.
The fund is looking to hire a £100m UK equities manager, a £160m global equities manager and a £135m index-linked gilts manager.
The fund’s existing managers are Legal & General Investment Management, Henderson Global Investors, Merrill Lynch Investment Management and State Street Global Advisors.
Following a review of the investment strategy of both its funds – the £240m Closed Pension Fund and the £980m Active Pension Fund— the fund decided to diversify its investments to reduce risk and increase financial returns.
“The pension committee has also decided to apply an environmental overlay strategy across all aspects of the pension fund management and aims to become a more active shareholder in respect of proxy voting on corporate governance issues. The new strategies will be implemented on a phased basis during 2004 and 2005,” the fund said.
The fund added that the appointed investment managers must have a strong and credible investment process and corporate governance policy or the ability to work with the agency and other third parties on governance and preferably a demonstrable understanding of sustainable responsible investment (SRI) including what financial impacts may arise on specific companies and how these can be managed within the fund. There will be performance targets to achieve returns in-line with an overall and specific asset benchmarks.
“The agency wishes to encourage potential suppliers to propose their most imaginative offer to manage a multi asset passive or enhanced index portfolio Incorporating sustainable environmentally responsible investment and corporate environmental governance principles,” it added.
Asset allocation of the fund stands at: UK equities 55%, overseas equities 22.5%, UK bonds 7.5%, overseas bonds 3.5%, index-linked bonds 5.5% and cash 5.5%.
Watson Wyatt is advising the pension fund.
Deadline for tender is August 27.
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