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NEST seeks asset manager for move into high-yield debt

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The UK’s National Employment Savings Trust (NEST) is to diversify its exposure to high-yield debt and is seeking an asset manager to oversee an actively managed mandate.

The £1bn (€1.1bn) master trust’s CIO, Mark Fawcett, said global high-yield bonds offered “attractive” returns in a fixed income environment otherwise dominated by low-yielding paper.

“Procuring a high-yield bond fund will also further diversify our members’ portfolios,” Fawcett added.

“By including this asset class in our building block mandates, we will be joining the growing number of institutional investors holding high yield.”

In a statement accompanying the tender, NEST added that it was looking for a manager with a robust risk management framework, able to consider environmental, social and governance factors.

The tender also stated that NEST would invest using a pooled fund, rather than opting for a segregated mandate. Expressions of interest are requested by 12 December.

NEST members are already exposed to high-yield debt, although the limited exposure to date forms part of the passively managed multi-asset mandate overseen by BlackRock.

The pension provider last year pledged to expand the number of standalone, single-asset mandates in an effort to gain greater control over its asset allocation as its AUM has grown.

Since then, it has named Amundi as its emerging market (EM) debt manager, sitting alongside standalone EM equity mandates and funds investing in global property.

The eventual high-yield manager would join an increasing number of active managers employed by NEST, including Amundi and Legal & General Investment Management and BlackRock.

NEST has to date largely opted for passive mandates in an effort to control costs, in line with its 0.3% annual management charge.

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