An undisclosed European pension fund is tendering a $600m (€552m) global government bond mandate using IPE Quest, with an element of active investment possible.
The mandate could be split in two, with each manager running $300m.
According to search QN-2145, the client wants a passive or semi-passive investment process, against a customised Barclays index.
According to the tender, the process would be semi-passive in that the manager(s) would have to replicate the benchmark in terms of its country, ratings and maturity bucket breakdown but could deviate from it in the government-related part of the portfolio with respect to issuers.
“If regarded as useful, a customised index could also be used for the government-related,” the Quest search states.
Applicants should have at least $5bn of government bonds under management, and $20bn in overall assets under management.
They should have a track record of at least five years, although eight years is preferred.
Performance should be stated to 31 December, gross of fees.
The breakdown of the customised index can be found below. Deviations of absolute +/-1% from the country allocation are permissible and +/-5% of the benchmark weight in terms of the rating allocation, while the duration deviation is capped at 0.25.
| Rating | Weighting | Duration | Spread | |
|---|---|---|---|---|
| Barclays US Treasuries | AAA | 25% | 5.8 | 0 |
| Barclays USD Government-related Developed | - | 15% | 4.5 | 43 |
| Barclays Treasuries Germany | AAA | 20% | 7.3 | 0 |
| Barclays Treasuries France | AA+ | 10% | 7.4 | 27 |
| Barclays Treasuries Netherlands | AAA | 2.50% | 7.4 | 11 |
| Barclays Treasuries Belgium | AA | 2.50% | 8.2 | 29 |
| Barclays Treasuries Austria | AA+ | 2.50% | 7.6 | 18 |
| Barclays Treasuries Italy | BBB | 2.50% | 6.7 | 95 |
| Barclays Treasuries Spain | BBB | 2.50% | 6.4 | 100 |
| Barclays Treasuries Ireland | A- | 2.50% | 6.2 | 45 |
| Barclays EUR Government-related Developed | - | 15% | 5.7 | 40.7 |
| TOTAL | 100% | 6.2 | 22.7 |
The pension fund expects a maximum tracking error of 1%.
Interested parties should have experience with managed/segregated accounts as an investment vehicle.
Applications should show a comparable strategy to the one the pension fund is requesting.
The deadline is 19 January.
Conference calls with long-listed portfolio managers will most likely be held in the week starting 29 February, and onsite due diligence in the week of 25 April.
The IPE news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email jayna.vishram@ipe-quest.com
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