The £6.6bn (€7.5bn) Hampshire Pension Fund is seeking three managers to run a new 10% allocation to multi-asset credit.
The fund – part of the UK’s Local Government Pension Scheme (LGPS) – is looking to invest primarily in high-yield fixed income and floating-rate corporate debt of North American and European companies, including loans and bonds, according to a tender notice.
Managers could invest on an opportunistic basis in other debt instruments, such as debt and equity tranches of collateralised loan obligations, mortgage-backed securities and other asset-backed securities, Hampshire said. This would be limited to 25% of the portfolio.
Exposure to lower yielding investment grade credit will be a function of volatility management rather than for income generation, the pension fund said.
All currency exposure is to be hedged back to sterling. Interest rate duration should be around two years.
The local authority scheme said it would consider investing on either a segregated or pooled fund basis. Any pooled fund must have a minimum of monthly liquidity.
Interested parties should manage at least £3bn in actively managed multi-asset credit mandates and, at a minimum, have a lead manager who has managed global multi-asset fixed income mandates for more than 10 years and have a track record of more than three years within the applying firm.
Management fees including all other fees and expenses should be below 50 basis points a year.
As at 31 March 2017 Hampshire had a 58% allocation to equities and a 27.5% allocation to fixed income. It is also invested in UK and European property (6.7%) and alternative investments (7.3%).
The pension fund was valued at £6.6bn at the end of March this year.
Hampshire is part of the ACCESS asset pool formed by 11 LGPS funds. In March the £41bn group appointed Link Fund Solutions to run its pooled assets. UBS was awarded a £11bn passive management mandate for ACCESS in October last year.