The UZ Gent pension fund, for staff of University Hospital Ghent in Belgium, is tendering a €16m emerging market (EM) bond mandate and an €82m tactical asset allocation (TAA) mandate, via the EU’s TED electronic tendering service.
The pension fund said in the notice that the EM bond mandate was estimated to be worth around €16m, with a strategic weighting of 3% of the total portfolio.
The scope of this mandate would increase significantly in the future because of expected monthly net inflows into the pension fund, it said.
The fund said it was looking for active managers to invest in EM debt, using a combination of government bonds and quasi-sovereign and corporate bonds, in hard and local currency.
Investment managers responding should indicate which bonds would be included in the mandate, it said.
Investments are to be managed actively against a benchmark, aiming to outperform that benchmark after fees, while taking the necessary risk control relative to the benchmark into account.
The second mandate being tendered by the EZ Gent pension fund is for TAA, worth around €82m, or 15% of the portfolio in terms of strategic weighting.
This mandate would increase gradually over time based on new inflows into the pension fund and/or reallocations, until it reached the 15% strategic weighting, the fund said.
The TAA could be invested in a wide range of liquid investment asset classes, with the point of comparison being a benchmark of 50% equities and 50% bonds.
The purpose of the strategy is to improve risk-adjusted returns compared with fixed or strategic asset allocation.
However, the pension fund said the mandate did not permit speculative transactions – leverage, for example – and that derivatives could only be used for efficient portfolio management or to hedge certain exposures.
The UZ Gent pension fund warned that, for both mandates, its board reserved the right to decide whether to allocate, and said it would not be liable for damages if it decided not to go ahead.
The deadline for receipt of tenders for both mandates is 8 September.