Mandate roundup: IPE-Quest, Solidarieta Veneto Fondo Pensione, FinInt, Groupama, Hertfordshire
GLOBAL – A Scandinavian pension fund has tendered a $200m (€147m), local currency emerging market debt mandate using IPE-Quest.
According to search QN1277, the mandate will be benchmarked against the JPM GBI-EM global diversified index, but the manager may be allowed to make off-benchmark investments in the local currency debt of frontier markets.
Possibly two managers will be appointed, with one focusing on emerging market countries and the other on frontier markets. As such, dedicated frontier market managers are also encouraged to apply.
The pension fund is looking for long-only investors that are fully invested at all times, using no leverage.
It said it would consider either a separate account within the pension fund's own investment trust or a pooled fund, depending on circumstances.
The scheme is looking for a manager with a proven track record of managing standalone emerging market local currency sovereign debt mandates – in other words, mandates with no exposure, or limited exposure, to emerging market hard currency sovereign or corporate debt.
The manager must also have a minimum three-year track record, and at least $1bn of emerging market local currency sovereign debt assets under management.
The deadline for applications is 22 February.
Meanwhile, in Italy, the Solidarieta Veneto Fondo Pensione, the €600m pension fund for blue-collar workers in the Veneto region, has appointed alternative asset manager Finanziaria Internazionale (FinInt) to run its new local investment portfolio.
The mandate, a first for Italy in terms of local investing, was launched with €30m on 1 January.
The mandate will constitute a permanent allocation of 5% of three out of the pension fund's four segments – cautious, dynamic and balanced.
The fourth, guaranteed, offers guaranteed returns set by Italian law, currently 1.5% plus 0.75% annual inflation.
The new portfolio will invest in non-government bonds issued by companies, including local credit institutions, operating in the Veneto.
This will then translate into credit for small and medium-sized enterprises within the region, stimulating the local economy.
FinInt runs 10 real estate funds with assets under management of €1bn. It is also a leader in the Italian securitisation market and specialises in illiquid and distressed assets.
"The aim is to diversify the pension fund portfolio," said Paolo Stefan, director of Solidarieta Veneto, who is in charge of the regional fund. "We consider the regional economy to be an area of excellence and therefore we feel justified in committing funds to investments there."
Solidarieta Veneto has also created a new mandate within its €150m cautious fund that has been awarded to Groupama.
The cautious fund is made up 90% of bonds and 10% of ethical equities. Bonds in the portfolio are low-risk, with maturities of less than 10 years.
Stefan said the scheme decided to split the mandate in half once the fund reached €150m in asset value.
The cautious fund's existing manager Unipol will continue to manage the other half.
Lastly, the Hertfordshire County Council pension fund has tendered two mandates – a core-plus UK bond mandate and an unconstrained/absolute return global bond mandate.
Applicants may apply for either one or both, which will be actively managed.
Each contract will run for five years, with the option to extend on an annual basis for up to a maximum of a further five years at the sole discretion of the council.
The pension funds said "market movements" would determine the mandates' exact size, although it estimated that the first would range between £350m (€260m) and £400m, the second, £150m and £200m.
The first mandate is expected to be managed against a sterling benchmark, most likely an aggregate benchmark of 50% Gilts/50% investment-grade corporate bonds.
The investment objective will be to target an excess return of +1.5-2.5% per annum above the benchmark return.
The second mandate is expected to be managed against a cash benchmark (LIBOR or equivalent), targeting an excess return of +3-6% per annum above the benchmark return.
For more information, visit the joint procurement website Supply Hertfordshire.
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