France’s pension reserve fund has awarded €650m in new US equity active management mandates, picking new ones except for William Blair for one small cap brief.
For US large and mid caps Fonds de reserve pour les retraites (FRR) had decided to launch a request for proposal (RFP) for blended strategies, having previously awarded separate value and growth mandates.
For this new approach, it has retained JP Morgan Asset Management and BFT Investment Managers (Parnassus Investments as the financial delegate). The mandates are for an indicative average amount of €450m.
For US small caps, it has once again entrusted management to William Blair, which previously also ran a growth mandate. Fundlogic (Calvert Research and Management as financial delegate) has also been picked to run US small-cap investments for FRR. The mandates are for a total indicative amount of €200m.
Adrien Perret, co-executive director for FRR, told IPE the decision to launch an RFP on a blended universe followed a study of the expected outperformance of US equity managers.
“We wanted to select managers that could perform in many different market environments and that could adapt their portfolios,” he said in written comments.
“We expect that a wider investment universe will help the managers to outperform and to set up responsible investment policies, whether coming from their incentive or aimed at respecting the mandate’s constraints.
“Indeed, these RFPs allow FRR to spread its ESG policy across US investors and companies, which is an important goal to us.”
FRR is a member of the Net Zero Asset Owner Alliance, and requires its managers to comply with its responsible investment strategy, including to achieve emissions reduction targets.
These are being increasingly tightened as FRR renews management mandates. For US equities, the target compared to the 2024 benchmark is a 40% reduction at start-up and a 75% reduction by the end of June 2029.
Managers are also expected to provide detailed and regular reporting on all ESG dimensions.
Although FRR currently pursues its goal mainly by using traditional market cap-weighted benchmarks and giving its asset managers stringent decarbonisation targets, Perret recently told IPE that it also wants to contribute to the development of indices that can drive more decarbonisation, so it doesn’t have to rely only on active management.
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