Professional Pensions spoke to Wellington Management fixed income portfolio manager Campe Goodman as part of an exclusive series of interviews with some of the winners of the PP Investment Awards. This is what he had to say…
What does it mean to win this award?
Wellington's ethos has always been to put our clients first, and we're extremely proud to have been recognised for the value we have brought to our multi-sector credit clients over the past year. We will continue to partner with pension schemes on their longterm goals, through building bespoke solutions and delivering strong investment outcomes.
What do you believe sets you apart from your peers?
We believe two key areas set us apart: our investment platform; and our work on ESG and sustainability.
To take advantage of opportunities and navigate environments like 2020 requires a strong credit research platform. Our analysts often cover the same industry for decades, bringing unrivalled industry and company knowledge. Their collaboration with our equity analysts aids our holistic assessment of companies.
During 2020's volatility, our fundamental research and sector rotation skills enabled us to rotate from a defensive position into promising ideas in dislocated areas. Our approach balances structural themes with cyclical strategies and opportunistic positions, reducing reliance on any single investment horizon.
Wellington has dedicated teams of both ESG and climate research specialists. Our investment teams use this proprietary ESG and climate research to make better-informed decisions. While we consider both transitional and physical climate risks, our investment research collaboration with Woodwell Climate Research Center, a leading climate science institute, gives us market-leading insights into impacts of physical climate change on securities we hold.
In partnership with some of our multi-sector credit clients, we have worked on a portfolio construction approach which targets the same risk and return objectives as their existing portfolios, while aligning better with their views on ESG factors. The approach has restrictions on fossil fuels, weapons and tobacco, while also allocating to a basket of impact bond "best ideas". This portfolio construction exercise has reduced the carbon footprint of these portfolios by more than 50%.
What are the key challenges facing your scheme clients?
Our UK pension clients face multi-faceted challenges, and we believe a multi-sector credit allocation can play a useful role.
• We allocate to the higher- yielding fixed income sectors, providing yield in a low-yield environment.
• We invest across more liquid public credit sectors, complementing illiquid allocations and providing a source of funds for locking in longerdated spreads.
• We target equity-like returns with muted volatility, helping schemes to de-risk from equities when funding levels remain challenged.
Sustainably aligned investment solutions remain a firm priority for the schemes we work with and we continue to consider ESG issues as part of the overall research process, devising innovative ways clients can better align their investments with their beliefs.
While ESG factors are considered as part of security selection, they will not necessarily result in the exclusion of an issuer or security from the investment universe.
How will you continue to improve your services over the coming 12 months?
Our clients face increasing demand for ESG and climate reporting. We are committed to exceeding their requirements by providing transparent and meaningful assessment and reporting for our portfolios. We are also helping them to meet their upcoming obligations for the UK Stewardship Code and the Task Force on Climate-related Financial Disclosures.
Increasing numbers of schemes are making a commitment to net zero carbon emissions. Given our large presence in equity markets and the long-standing relationships we foster with companies, our ability to engage for our fixed income clients will be critical for creating real world decarbonisation over time. In 2020, we became a founding member of the Net-Zero Asset Manager Initiative, committing to support the goal of net zero greenhouse gas emissions by 2050.
Wellington Management won the Multi Asset/Sector Credit Manager of the Year category of the PP Investment Awards 2020. Find out more about the awards here.
Tender Watch: Aon appointed at General Motors schemes; Hampshire names real estate manager; Essex hires stewardship adviser