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ERAFP tendering €5bn of euro-zone, European equity mandates

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ERAFP, the €23.5bn French additional pension scheme for civil servants, is calling for tenders for up to some €5bn in euro-zone and European listed equity management in connection with mandates that are expiring next May.

The pension fund is looking to award seven mandates; the mandates’ size is for between €250m and €1bn except for one, which is a small cap mandate for some €140m.

Six of the seven mandates are for a “fundamental, non-benchmarked, SRI management” approach – four being in relation to euro-zone equities and the other two for European equities.

All mandates require compliance with the scheme’s socially responsible investment (SRI) guidelines and will run for six years.

ERAFP also has a €500m-€1bn mandate to award for the smart beta index-based management of a portfolio of euro-zone mid and large cap equities, and is using the Scientific Beta Eurozone Max Sharpe Ratio ERAFP SRI Carbon Efficient index, which was developed by the EDHEC Risk Institute’s ERI Scientific Beta.

The new mandates being put out to tender effectively cover the entirety of ERAFP’s European and euro-zone equity portfolio, IPE understands, with some changes taking place.

An ERAFP spokesperson told IPE that the pension scheme is shifting from benchmark to non-benchmark management in relation to six of the seven mandates.

One of the mandates for the “fundamental, non-benchmarked, SRI management” of some €250m-€1bn in euro-zone mid and large cap equities now includes an equity risk management component.

Further, according to the spokesperson, the mandate corresponding to the passive management against the SRI smart beta index includes a decarbonisation methodology. 

Amundi currently has this mandate, with the French asset manager having worked with ERAFP in 2014 to develop a methodology to decarbonise what was then a €750m equity portfolio under an indexed management mandate.

Edram, Rothschild et Cie Gestion, and Tobam are the asset managers that currently have mandates for active, non-benchmarked SRI management of euro-zone mid and large caps.

BNP Paribas Asset Management and AXA Investment Managers have active benchmarked SRI management mandates with ERAFP, with BNP Paribas also managing a passive mandate on a small cap SRI smart beta index. 

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