Hammersmith and Fulham Pension Fund has selected Allspring Global Investments and Insight Investment to handle a new buy-and-maintain credit mandate.
As part of the deal, Allspring will oversee 10% of the pension fund’s £1.2bn in total assets while Insight Investment will handle 5% of the scheme’s assets via London CIV (LCIV).
This follows a review of the scheme’s investment strategy at a pension fund committee meeting on 28 February where the committee agreed to make a 15% strategic allocation to fixed income, which is to be implemented with an investment-grade buy-and-maintain credit strategy.
At a committee meeting on 13 June, the fund reviewed a list of managers provided by consultancy Isio and invited candidates to present with a view to making an appointment.
They were unable to arrive at a decision initially due to “insufficient information” but after a number of follow-up meetings, Allspring and Insight Investment were selected to look after a 15% (circa £195m) allocation to buy and maintain credit.
The fund confirmed to IPE in an emailed response that it allocated 10% (£129m) to Allspring’s Climate Transition Global Buy & Maintain Fund and 5% (£64.5m) to LCIV’s Buy & Maintain Credit Fund.
”This approach will bring additional diversification benefits, both from a strategy and manager perspective, as well as provide monitoring benefits of both the investment and ESG approaches of each strategy. The relevant due diligence and preparation required to facilitate the transition to these products is under way,” the fund told IPE.
Allspring buy-and-maintain strategy
Developed by Allspring, the buy-and- maintain credit strategy is available to investors via its Climate Transition Global Buy and Maintain Fund which was launched earlier this month, It focuses on high-quality debt issuance from companies with clear net zero alignment goals.
The strategy is open to institutional investors seeking to reduce the carbon intensity of their investments and provides a clear path to net zero by 2050.
Allspring soft-launched the fund in August and has already accrued $100m in institutional commitments before opting to broaden out to a wider investor base.
Andy Sowerby, head of international client group at Allspring, said: “We are witnessing a significant increase in demand for fixed income across our client base.”
He said that, typically, investors are also focused on decarbonising their exposures, along with increased engagement with investee companies who continue to finance their transition to net zero.
Sowerby added that Allspring devoloped a range of investment solutions across investment-grade credit, high yield and equities that are designed to help clients meet their financial and climate objectives.
Henrietta Pacquement, senior portfolio manager and head of the global fixed income team and the sustainability team at Allspring, added: “I have been saying all year that last year’s correction in fixed-income markets creates this year’s opportunity.”
She said that after more than a decade of depressed yields, investors are now able to take advantage of much more constructive market conditions to build diversified exposure to high-quality credits.
She continued: “Therefore, the launch of our Climate Transition Global Buy and Maintain Fund could not be better timed. We continued to deepen our research and resources around sustainability and climate research and can add significant further value to our clients in this evolving area.”
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