NEST has appointed JP Morgan Asset Management for a high yield bond mandate that forms part of the defined contribution pension scheme’s “retirement date” funds.
The mandate involves NEST acting as the seed investor for JP Morgan’s High Yield Opportunities Fund.
The UK government-sponsored scheme for auto-enrolment will initially allocate £40m (€47m) to the fund, which represents roughly 3% of NEST’s total portfolio (around £1.7bn).
John St Hill, deputy chief investment officer at NEST, said the mandate was a long-term strategic move for the pension fund.
“With long-term interest rates at current low levels we believe that adding high yield bonds to the portfolio will enhance returns for our members,” he said. “Diversifying our members’ portfolios across a range of asset classes is the best way to manage risks and deliver returns.”
He said NEST looked for an active manager and was impressed by JP Morgan’s approach to risk management, as well as their commitment to integrating environmental, social, and governance issues into their investment processes.
BNP Paribas lands Italian custody services mandate
Italy’s €1.3bn pension fund for public transport employees has awarded a custody and depositary mandate to BNP Paribas Securities Services.
BNP Paribas will provide Fondo Pensione Priamo with custody and transaction settlement services and will verify the fund’s asset value and monitor regulatory limits as agreed with asset managers.
Also in Italy, the pension fund for Fiat’s middle-management, Fondo Pensione Quadri e Capi Fiat (FPQ), is seeking managers to run its balanced equity and bond funds and its guaranteed fund.
FPQ had €567m of assets under management at the end of December, with around €413m in the balanced bond fund, €66m in the balanced equity fund, and €89m in the guaranteed fund.
One mandate each may be allocated for the equity fund and guaranteed fund, and up to three for the bond fund.
The mandates are expected to be for five years, with the possibility of an extension. Willis Towers Watson is helping with the search.