ERAFP award global equity and eurobond mandates
FRANCE - ERAFP, the French civil service supplementary pension scheme, has awarded five new asset management mandates as part of a €2.4bn diversification strategy.
The €6.5bn scheme is 100% invested in socially responsible investments but in May last year it initiated a search for new investment managers to run three global equity mandates, excluding emerging markets, and two investment grade bond mandates. (See earlier IPE article: ERAFP shifts away from bonds)
ERAFP, which has 4.6 million members, has finally received government approval to award two of the global equity mandates to Allianz Global Investors and State Street Global Advisers, while a "stand-by mandate" - where the firm could be called on to provide services in replacement of a manager - has been given to AXA Investment Managers.
Meanwhile, Crédit Agricole Asset Management has been selected to run a portfolio of euro-denominated investment grade debt securities, while the "stand-by mandate" has been awarded to Groupama AM.
ERAFP revealed the total average investment in global equities will be €150m a year, while the bonds investments will average a total of €250m a year, bringing the total investment in the two new asset classes to €2.4bn over the initial three-year period of the contracts, although the fund does have the option of a further three-year extension.
At the end of 2008, ERAFP's asset allocation was divided as 90% in bonds, of which 77.9% was held in sovereign debt and 11.1% was in index-linked bonds, while 8.6% in equities and 2.5% was kept in liquid assets.
One of the aims of the diversification process is to increase the equity allocation to 25%. (See earlier IPE article: RAPF: allocating for the long term)
That said, ERAFP confirmed the new mandates will "complement those entrusted to four asset managers in 2007" and they would also be managed in compliance with the fund's strict SRI policy. (See earlier IPE article: French civil servants to put up to €1.2bn in SRI)
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