UK - The Environment Agency has appointed Morley Fund Management and Robeco to manage £60m or about 5% each of its Active Pension Fund as part of its move from a balanced to specialist investment approach which has seen a total eight firms awarded £1bn in mandates.
In May the agency announced Legal & General, Henderson and Merrill Lynch had been replaced by six new managers - Hermes, Standard Life Investments, European Credit Management, Capital International, State Street Global Advisors and Sarasin Chiswell - on the back of disappointing returns, advice from investment consultants and in-house research.
Morley and Robeco complete the new line up of eight specialist managers and will both manage £60m or 5% of the fund’s assets in segregated multi-manager accounts.
The agency said Morley will invest in about 12 UK property funds while Robeco will invest in a variety of sustainable private equity funds in Europe and the US with a bias towards energy, water, waste, food and health sectors. About 30% will be allocated to “green” technology funds.
“After evaluating tenders from nearly 40 property and private equity managers, we are delighted to have appointed Morley and Robeco respectively, whom we and our advisors believe possess the necessary quality of staff, investment processes and track record to deliver our demanding financial performance targets and our environmental and social responsible investment (SRI) requirements,” said Howard Pearce, head of environmental finance and pension fund management.
Pearce said the agency was drafting a short report on the fund’s experiences in changing its investment strategy and implementing and environmental overlay strategy across 100% of the fund to help other pension funds and assist in the development of the market for responsible investment products.
Mercer Investment Consulting provided general investment advice on the manager re-structure while Rathbone Greenbank provided specialist advice on sustainable responsible investment.
The pension fund’s legal adviser is Osborne Clarke and its consulting actuary is Hymans Robertson.
Hermes will passively manage £425m or 38% in UK/overseas equities and index linked gilts while all other mandates will be actively managed including: Standard Life Investment’s £185m or 17% in UK equities, European Credit Management’s £155m or 13% in corporate bonds, Capital International’s £75m or 7% in global equities, SSgA’s £75m or 7% in global equities, Sarasin’s £80m or 7% in specialist environmental equity, Morley’s £60 or 5% in UK property management and Robeco’s £60m or 5% in private equity.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers