Brunel Pension Partnership has launched a multi-asset credit fund with around £2.1bn (€2.4bn) of commitments from shareholder pension funds. Climate change considerations played a key role in the selection process, it said.
The funds will be spread across three separate mandates. The bulk – £1.3bn – will be managed by Neuberger Berman, with the remainder split equally across Oaktree and CQS.
The pooling company only considered managers that showed awareness of whether companies were aligned with the Paris climate change accord, according to David Spencer, senior investment officer.
“We also questioned them closely to ensure they knew where carbon data was weak in specific bond sub-sectors, and how they could work towards meeting Paris alignment despite these issues,” he said.
Brunel, one of the UK’s eight local government pension asset pools, has committed to halving its portfolio emissions by 2030 and cutting them to net-zero by 2050. Several of its client pension funds have also made net-zero pledges.
David Cox, head of listed markets at Brunel, said: “After a rigorous search and analysis process, we identified three managers who displayed the investment expertise and responsible investment acumen we were looking for – as well as providing a diversity of styles.”
The multi-asset credit fund provides access to sub-investment grade credit across a range of asset classes, such as high yield corporate bonds, bank loans, asset-backed securities and emerging market debt.
“The portfolio is very different from our other portfolio offerings, enabling our clients to reduce risk while still achieving reasonable returns through the use of diversified credit,” said Spencer.
Selective exposure to investment grade corporate bonds is permitted in the portfolio. Launch of the multi-asset credit fund comes a year after Brunel issued a call for expressions of interest for the fund. At the time it indicated it would be for £1.5bn. IPE understands that the fund size is now larger due to a combination of changing market values and increased commitments.
LGPS Central chose BMO Global Asset Management and Western Asset Management Company for a multi-asset credit fund of its own last year, while Border to Coast went with Wellington Management, Barings, PGIM Fixed Income and Ashmore for its multi-asset credit fund, plus PIMCO as the core manager.