UK Environment Agency in €1.4bn specialist move
UK - The UK's Environment Agency has awarded £995m (€1.4bn) to six specialist managers - resulting in a loss of balanced mandates for Legal & General, Henderson and Merrill Lynch.
The move - which cuts the agency's UK equities allocation - follows what it called "disappointing investment returns". It was based on the advice of Watson Wyatt and in-house research.
The new managers are Hermes, Standard Life, European Credit Management, Capital International, State Street Global Advisors and Sarasin Chiswell. They will manage mandates ranging from £75m to £425m (further details below).
"Following a comprehensive review, the Environment Agency today announced the implementation of a revised investment strategy, and the appointment of six new specialist investment management companies to manage almost £1bn of the Environment Agency's Active Pension Fund," the agency said.
It will cut UK equities to cut concentration risk, as well as government bonds and cash. Allocations to global equities and corporate bonds are being increased. It will make new allocations to property and private equity.
Mercer provided general investment advice and Rathbone Greenbank advised on sustainable responsible investment. B-Finance assisted with manager search and selection. Morgan Stanley carried out transition management. Hyman Robertson are the consulting actuaries.
The agency will assess manager performance on environmental and governance measures as well as investment performance.
"After evaluating tenders from nearly 100 investment companies, we are delighted to have appointed six investment companies whom we, and our advisors, believe possess the necessary quality of staff, investment processes and track record to deliver our financial performance targets, environmental and SRI requirements," said Howard Pearce, head of environmental finance and pension fund management.
The agency also selecting two managers for £50m each in property and private equity.
- Hermes: £425m in passive UK/Overseas equities and index-linked gilts
- Standard Life Investments: £185m in active UK equities
- European Credit Management: £155m in active corporate bonds
- Capital International: £75m in active global equities
- SSGA: £75m in active global equities
- Sarasin: £80m in specialist environmental equities