Border to Coast Pensions Partnership, one of the largest UK pension pools, has finalised restructuring its emerging markets (EM) equity fund seeing total assets exceed £1bn (€1.2bn), following additional commitments from partner funds and investment growth.

The pool said the fund was restructured to reflect the increasing importance of China within emerging markets.

Daniel Booth, chief investment officer at Border to Coast, said: “The increasing weight of China in market indices means our clients are better served by larger, locally based teams covering this large, broad and important market.

“We see China as a key hub for innovation and growth and believe that our approach will maximise our investors’ risk-adjusted returns.”

The fund was split into two segments: one focused on the Chinese market managed by two specialist China equity managers (UBS Asset Management and FountainCap Research & Investment); and one for non-Chinese emerging markets, managed directly by border to Coast’s in-house team.

Following the restructure, the pool said, additional subscriptions and investment growth have taken the value of the fund to over £1bn.

According to Cerulli Associates, China represents a significant opportunity for asset managers, as the country’s assets under management grew 34.0% in 2020 and net inflows increased 21.8% year-on-year.

Several pension funds including in the Netherlands and the Nordics continue to see China as an important area to invest in despite recent regulatory tension.

As part of the restructuring, the fund’s benchmark has been revisited and will be based on the FTSE Emerging Index with the China specialists benchmarked against the FTSE China Index.

Booth added that Border to Coast is “also driving the integration of environmental, social and governance (ESG) standards globally and truly appreciate the support of and partnership with our external managers”.

Transition management services were provided by BlackRock, with Inalytics acting as transition advisor.

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