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Danish pension funds tender Japanese, Latin American equity mandates

IPE Quest - A Danish asset manager has tendered $125m (€98m) worth of Japanese equity mandates and a $100m Latin American equity mandate on behalf of three Danish pension funds, using IPE Quest.

According to search QN1220, the pension funds are looking for two Japanese equity core products, preferring active, research-driven strategies with a long-term, bottom-up investment philosophy.

The mandates can be quantitatively driven - fundamental or enhanced index products, for example - or fundamentally driven.

Tracking error must be below 7 per year against the Topix index, measured over a five-year period.

A  proven investment process and a well-diversified portfolio - securing a consistent track record such as a high information ratio or a “batting average above 50%” - across various market environments is essential, with performance primarily coming from stock selection.

On the Latin American mandate (QN1221), the pension funds said they preferred an asset manager that actively employed macroeconomic factors in country allocation, “as we believe in the possibility to create excess returns when allocating among Latin American markets, given the large volatility in returns from Latin America”.

For all mandates, risk management should be an “important and integrated part of the investment process”, with at least 50% of the risk budget coming from stock selection and no major bets toward sector allocation or investment style.

The pension funds added: “We prefer the up-market capture to be above 100, and [that applicants] not focus on capital preservation. Given the long investment horizon, we prefer the yearly portfolio turnover to be below 100%.”

They said they were looking for a manager that could demonstrate skills both in allocating the risk budget and generating performance in line with the core competencies of the investment team and the investment process and philosophy.

Preferably, the portfolio will be run by a team with a lead portfolio manager, who is focused on, accountable for and has a long experience with the product and strategy.

The pension funds said stability was also a key prerequisite, with the asset manager employing the same type of process and preferably the same team of portfolio managers for at least three years.

They added: “We prefer a UN PRI-compliant asset manager or, alternatively, a manager who has similar ethical guidelines. Our account has to be segregated, and carve-outs, as well as performance fees, are not accepted.”

Interested parties should state performance, gross of fees, to the end of 2011.

For the Japanese mandates, the closing date for applications is 30 January. Applications for the Latin American mandate must be received by 1 February.

The IPE.com news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email jayna.vishram@ipe-quest.com.

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  • QN-2519

    Asset class: Fund wrapper.
    Asset region: Global.
    Size: EUR 80m.
    Closing date: 2019-03-29.

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