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Local authority pension pool seeks ‘exceptional’ small cap managers

Clifton Suspension Bridge Bristol

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Brunel Pension Partnership is progressing with preparations for a global small cap equity sub-fund, having today launched a call for expressions of interest from “exceptional” managers.

The asset pool for 10 English local government pension schemes (LGPS) said the portfolio would have a size of around £365m (€402m), to be allocated between two to three managers. Formal launch is scheduled for the second quarter of next year.

David Cox, head of listed markets at Brunel, said that, in keeping with the asset pool’s overall outlook, “individual mandates in the sub-fund will be long-term only”.

“We will be looking for a global approach, with compelling small cap investment capability and strong evidence of ESG integration,” he added. “Both fundamental and quantitative managers will be considered. We will not consider regionally focused mandates.”

The pool indicated it was comfortable allocating up to 30% of the portfolio to emerging markets or micro-caps, but the benchmark would be the MSCI Small Cap World index.

The call for expressions of interest is the second step towards Brunel’s latest sub-fund. It launched the pre-search and registration process for the global small cap mandates in July.

The pool has said it intended to launch around 25 portfolios, spread across five different buckets, to allow its client LGPS funds to implement their investment strategies. The global small cap equities portfolio will be one of six active equity funds.

Brunel has already launched an active UK equities fund and a low volatility portfolio. A call for expressions of interest to manage high alpha global equities strategies went out earlier this year.

Brunel’s clients have some £30bn in assets under management between them.

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