Border to Coast launches £2.6bn global multi-factor equity index fund

Border to Coast Pensions Partnership has launched its first index proposition, enabling partner funds to pool £2.6bn (€3bn) of assets into a customisable strategy and significantly reduce costs.

Compared to partner funds’ existing solutions, Border to Coast stated that the global multi-factor equity index fund, launched in May, is expected to deliver significant annual fee savings due to the benefits of collective scale and strong strategic partnerships.

The proposition was designed in collaboration with partner funds and expands cost-effective access to global equity strategies within the pool. Border to Coast added that the proposition will blend stocks and target five traditional fundamental factors – value, momentum, quality, low volatility, and size.

Border to Coast will retain full control over the evolution of the fund, including its decarbonisation metrics and policy on exclusions. This, it said, is to ensure the proposition considers the long-term financial risks that net zero and responsible investment policies seek to mitigate.

The proposition was launched with support from five of its partner funds: Tyne and Wear, Lincolnshire, Cumbria, Bedfordshire and Warwickshire.

Border to Coast has appointed global investment manager BlackRock to manage the proposition in conjunction with STOXX as the index administrator, providing partner funds cost-effective access to market-leading strengths in index investing, research, factor-based solutions, and product design.

Ken Dawes, chair of the Tyne and Wear Pension Fund committee, said: “The launch of our partnership’s first index fund was a real collaborative effort, and demonstrates how Border to Coast delivers on the ambitions of pooling.”

He added: “This is a cost-effective solution which complements our existing pooled equity funds.”

“This isn’t just passive exposure to an index, it brings the best of active management together with the cost-effectiveness of index investing”

Jo Kempton, head of Lincolnshire Pension Fund

Jo Kempton, head of Lincolnshire Pension Fund, noted: “Working together with the Border to Coast’s investment team, we have developed a proposition that not only cuts fees but will also remain aligned with our investment policies. This isn’t just passive exposure to an index, it brings the best of active management together with the cost-effectiveness of index investing to provide a sophisticated solution that we wouldn’t have necessarily had access to prior to our partnership.”

Graham Long, head of external management at Border to Coast, said: “Our first index fund complements the robust platform of propositions we have designed and developed in collaboration with partner funds and further enhances the pooled global equity options we offer, in a strategy with meaningful integration of responsible investment principles focused on managing risk and delivering long-term value.”

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