LGPS Central, the UK investment pool, is via IPE Quest searching for a manager for its new buy-and-maintain sterling investment grade credit evergreen sub-fund, which is expected to be funded in mid-2024 with a total value of around £600m (€700m).

The sub-fund has a responsible investment (RI) integrated status, and applicants are expected to demonstrate that RI is fully integrated into the day-to-day management of their portfolios.

Participating firms are expected to already have a minimum of £3bn of external client money invested as of 31 December 2023, with a three-year track record in managing a sterling buy-and-maintain investment grade credit strategy submitted for this procurement.

LGPS Central is looking for managers that use a fundamental rather than quantitative approach, with evidence of strong performance and the ability to build a portfolio of robust good quality investment grade credit that will generate long-term performance whilst avoiding defaults.

It expects that applicants will consider the following when selecting strategy for the bid process:

  • take a fundamental approach to investing in sterling investment grade credit in a buy-and-maintain strategy and have a proven track record in this style of investment;
  • predominantly invest in sterling investment grade credit;
  • the benchmark used (for market awareness) will be ICE BofA Sterling Non-Gilts Index (excluding emerging markets and supranationals);
  • have a low turnover (less than 10% in normal market conditions);
  • have certain exposure limits, including no single investment above 5% portfolio; no single investment to be more than 5% of the company’s shares in issue, up to 5% cash; duration +/- 3 years the benchmark;
  • have a portfolio with a reasonable level of diversification;
  • have no leverage taken at the portfolio level;
  • may use derivatives for hedging and efficient portfolio management;
  • be fully hedged to sterling;
  • have a predominantly liquid portfolio; and
  • have no specific exclusions on investments held within portfolios.

Successful bidders will need to demonstrate a consistent, robust, repeatable investment process that is low cost, full transparency and value for money, the tender notice stated.

They also need to demonstrate RI integration and sustainability as part of their investment process and a strong governance and oversight of their process and investment.

The tendering process for this procurement is a three-stage process that will be fair, transparent, and non-discriminatory. It will be managed electronically by LGPS Central’s fixed income team via company’s e-procurement platform system, In-Tend.

The selection questionnaire must be submitted via the In-Tend portal before 12:00 GMT on 12 March 2024.

The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain further information contact IPE Quest directly.

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