Border to Coast picks core manager for multi-asset credit fund

Border to Coast Pensions Partnership has appointed PIMCO as the core manager for a multi-asset credit fund that is expected to be launched in early 2021 and could be for up to £3bn (€3.5bn).

The public sector pension pool, a collaboration of 12 local government pension schemes with £45bn in assets between them, has also launched a search for investment managers to run four individual asset class mandates.

Together the mandates will form a “core-satellite” structure for the multi-asset class strategy.

The individual asset class mandates will cover high yield bonds, leveraged loans, emerging market debt and securitised credit, with sizes expected to range between £250m and £500m, the investor said in a statement.

Border to Coast did not indicate the total size of the multi-asset class fund, but a spokesperson told IPE it could be up to £3bn. He indicated it would be wrong to conclude that the size of PIMCO’s mandate would be at least £1bn based on the specified potential sizes of the individual asset class mandates.

Daniel Booth, chief investment officer at Border to Coast, said: “Establishing a multi-asset credit fund is an essential part of Border to Coast’s objective in delivering long-term risk-adjusted investment returns for our 12 partner funds.

“PIMCO has a long and established track record of multi-asset credit investing and will play a key role as a strategic partner to Border to Coast in the set-up and on-going management of the fund.”

The fund will sit within the asset pool’s fixed income range and target cash plus 3-4% per annum through a diversified portfolio of higher yielding fixed income securities.

Around one-third of Border to Coast’s partner funds’ assets is currently being managed by the pooling vehicle. It has also secured £1.8bn of commitments from some of the individual pension funds for private market and infrastructure investment.

The local authority pension funds that form Border to Coast include Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, Northumberland, North Yorkshire, Surrey, South Yorkshire, Teesside, Tyne and Wear, and Warwickshire.