Utilities firm Centrica’s pension schemes have awarded an outsourced chief investment officer (OCIO) mandate to Schroders Solutions for their £10bn (€12bn) of assets.
Schroders will help the trustees of the three schemes develop their investment strategy, construct the overall portfolio, as well as manage and oversee third-party managers.
The mandate also covers support in meeting the schemes’ regulatory requirements.
As part of the mandate appointment, the team of seven Centrica in-house investment specialists, led by CIO Chetan Ghosh, will join Schroders Solutions.
The initiative was described as giving the Centrica team “closer access to a far greater resource and knowledge base” and also reducing key man risk while ensuring continuity of service to the trustees.
“After a thorough selection process, supported by Isio’s investment team, we are very pleased to announce that we are partnering with Schroders Solutions under an OCIO model to take forward our investment strategy and deliver security for the members of the three Centrica pension schemes,” said Allan Whalley, chair of Centrica’s trustees.
Neil Walton, head of OCIO and specialist solutions at Schroders, added: “This appointment reaffirms Schroders Solutions’ aim of being the provider of choice for OCIO and fiduciary management services by offering an end-to-end solution through to buy-out with a specific focus on robust portfolio construction, sustainability and bespoke service and reporting.”
Schroders Solutions was created following Schroders’ acquisition of River and Mercantile Group’s UK solutions division in February. R&M’s solutions business managed £42bn of UK fiduciary management and derivatives, with Schroders’ Global Solutions business managing £193.3bn.
Schroders said Centrica’s pension schemes’ assets would be managed in an open architecture framework, supported by extensive asset management and investment solutions capabilities.
The appointment is planned to be effective during the second quarter of this year.
Centrica’s deal with Schroders comes after the trustees of British Airways’ pension schemes last year pulled the plug on their in-house team in the largest OCIO deal to date in the UK. National Grid’s £13bn UK pension scheme awarded an OCIO mandate to Russell Investments a few months later.
Earlier this year Amundi announced the creation of an OCIO division.
In 2018, Centrica’s Ghosh spoke to IPE about how its pension schemes are run and why cashflow-driven investment is the future of pension management.
Schroders sets engagement targets for fund managers, analysts
Schroders has introduced engagement objectives for its fund managers and analysts as part of the launch of an ‘Engagement Blueprint’.
The engagement objectives apply across the equities and fixed income desks and will form part of personal performance goals of fund managers and analysts. A spokeswoman told IPE that the fund managers and analysts will be required to have at least three engagements a year, fully reported on, on one of the six themes Schroders has prioritised.
These are: climate change, corporate governance, diversity and inclusion, human capital management, human rights, natural capital and biodiversity.
“Social and environmental forces are reshaping societies, economies, industries and financial markets,” said Kimberley Lewis, head of active ownership, Schroders.
“By encouraging management teams to adapt to those changes, we are able to strengthen the long-term value of those assets, enhancing outcomes for clients, and to accelerate positive change towards a fairer and sustainable global economy.
“The launch of our Engagement Blueprint sets out what active ownership means at Schroders, how we engage with the companies in which we invest and what our clients can expect from us.”
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