Border to Coast Pensions Partnership, a Local Government Pension Scheme (LGPS) investment pool with combined assets worth £55bn (€65.3bn), is to launch a £1bn Emerging Markets Equity Alpha Fund, aiming to give access to some of the world’s fastest-growing economies for its partner funds.
Expected to launch in the first half of 2023, the emerging markets (EM) fund will seek to leverage Border to Coast’s collective scale to deliver the benefits of pooling by “securing cost-effective access to specialist managers in emerging markets”, it announced.
The pool is seeking up to two EM equity managers to run approximately £650m of the fund, joining two China specialist managers already appointed, it said.
The new managers will have demonstrable experience in EM equity investing and a long-term, high-conviction approach to stock selection, a statement said.
Given Border to Coast’s position as a responsible investor, managers will be assessed on the integration and reporting of ESG issues, including climate change considerations, and their active engagement with companies, it added.
Graham Long, Border to Coast’s head of external management, said: “We are looking to combine a selection of high-quality managers in the aim of delivering long-term, risk-controlled outperformance for our partner funds.”
He added: “Emerging markets are very diverse, and this year we have seen first-hand how polarised individual market performance can be. We are therefore expecting successful managers to be experts in both bottom-up stock selection and country risk analysis.”
Once launched, the fund will seek to outperform the MSCI Emerging Markets Index by at least 2% a year (net of fees) over rolling three-year periods, the pool stated.
Border to Coast has produced an online presentation for managers interested in bidding for the EM fund providing further information about the selection process.
The formal tender process will be launched on 4 May 2022, with the successful managers expected to be appointed in the second half of 2022.
Full details will be in the invitation to tender documents available from its consultancy Mercer via email.