French pension fund to tender 10 SRI mandates, focus on alternatives

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FRANCE - IRCANTEC, the €5.9bn supplementary pension scheme for French civil servants, is planning to implement a new socially responsible investment (SRI) asset allocation strategy this spring.

The fund - which is part of the Caisse des Dépôts et Consignations - plans to implement the strategy in several phases.

First, it will introduce environmental, social and governance (ESG) investment criteria for part of its core portfolio, which is currently split into equities (29%), five-year sovereign bonds (40%), 15-year sovereign bonds (6%), indexed bonds (20%) and real estate (5%).

To that aim, the fund is currently recruiting asset managers with a large amount of ESG experience. It has also launched tender processes for as many as 10 mandates.

It said it had delayed the implementation of ESG criteria for sovereign debt investments, however, as it was still assessing the best approach to take.

IRCANTEC said it aimed to adopt ESG criteria for the whole of its portfolio by year-end.

Meanwhile, the fund has selected Vigeo, a Paris-based ratings agency, to provide research and consultancy services for the implementation of the SRI charter.

Vigeo will help maintain control over the implementation of IRCANTEC's ESG criteria for every investment made.

Once ESG criteria have been adopted for the core portfolio, the scheme said it would then look into investing in alternative asset classes.

Edith Jousseaume - who is director of investments at Caisse des Dépôts and is advising IRCANTEC on its investment policy - told IPE the fund would begin to focus on alternatives this year and pursue its strategy throughout 2013.

"Following the first reform in 2008, which aimed to modify the structure of the IRCANTEC pension scheme, the board has decided to allocate a small percentage of its portfolio to real estate," she said.

"The institution will continue to diversify its allocations to alternative asset classes in the future by looking at private equity or other forms of small and mid-cap companies financing, as well as infrastructure."

Jousseaume added that the board of directors would also consider diversifying the fund's core portfolio by investing in convertible and municipal bonds.

IRCANTEC's new strategy follows the adoption of an SRI charter by the Caisse des Dépôts in 2009.

Two other French schemes have adopted similar agreements in the past - the civil servants pension scheme ERAFP and the Fond de Réserve pour les Retraites.