Border to Coast set to launch global multi-factor equity index fund

Border to Coast Pension Partnership is searching for an external manager to support the launch of its first equity index proposition, which is expected to attract more than £1bn of partner fund assets.

Set to launch in early 2025, the global multi-factor equity index fund will offer partner funds cost-effective access to a specialist index manager, overseen and managed by the Boarder to Coast investment team, it was announced.

Border to Coast is owned by 11 local government pension schemes – Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, North Yorkshire, South Yorkshire, Surrey, Teesside, Tyne and Wear, and Warwickshire – with over £58bn in investments, of which Border to Coast is directly responsible for £40.3bn.

As the first index fund launched by the pool, it will complement Border to Coast’s existing range of actively-managed listed equity strategies and will support partner funds to implement long-term investment strategies, while enabling the pooling of assets currently held in external passive strategies.

Border to Coast added that the new strategy will reflect a mix of investment style factors and operate in line with a science-based climate transition pathway aligned with the net zero commitments made by the pool and its partner funds.

Once launched, Border to Coast said it will seek to outperform the MSCI All Country World Index by at least 0.5% a year (net of fees) over rolling five-year periods.

The formal tender process for an external manager will be launched on 24 June 2024, with the successful manager expected to be appointed in the last quarter of 2024.

Graham Long, head of external management at Border to Coast, said: “The launch of our first index fund marks a further expansion in our capabilities as we build on the strong platform of propositions we have created for partner funds.”

Long said that opportunities in the multi-factor space have grown considerably and form an important component in some of Border to Coast’s partner funds’ portfolios.

“Meaningful integration of ESG into the investment approach and alignment with our net zero goal ahead of 2050 coupled with our role as an active steward of assets will be essential components of the new proposition,” he noted.

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