France’s public service additional pension scheme (ERAFP), a 100% SRI investor with €27bn in assets, has completed an enormous tender process to renew a raft of European equities strategies by naming fund managers to 16 investment mandates worth a combined total of €4.6bn, with a strong accent on long-term fundamental, active approaches.
ERAFP is one of the world’s largest public pension funds in terms of member numbers, with over 4.5m beneficiaries, 45,000 employers and nearly €1.8bn in annual contributions, making it one of the fastest growing institutional asset pots in the world, all of which is outsourced to third party managers.
As a part of a series of reviews of investment mandates that had reached their term, the fund re-tendered the equities briefs in June last year. It has awarded seven active and nine stand-by mandates for European share portfolios that follow its SRI charter. The fund does not use a consultant for its manager hires. Significantly, ERAFP is stretching the duration of European equity investment mandates to an initial six-year period.
The mandates have been awarded in five lots:
Lot 1 (between €500 million and €1 billion) – Index management mandate for mid and large cap European equities for SRI/decarbonised strategies
Active mandate winner: Amundi, the Paris-based global fund manager.
Standby-mandate: THEAM, the model-driven investment and indexing specialist owned by BNP Paribas, the French banking group.
Lot 2 (between €250 million and €1 billion) – Active fundamental SRI equity: non-benchmarked, eurozone mid and large caps
Active mandates: Allianz Global Investors, Edmond de Rothschild Asset Management (EDRAM) and Mirova, the sustainability specialist subsidiary of Natixis Asset Management.
Standby-mandates: Sycomore Asset Management and Ofi Asset Management.Lot 3 (between €250 million and €1 billion) – Active fundamental SRI equity: non-benchmarked, eurozone mid and large caps with an equity risk overlay
Active mandate: AXA Investment Managers.
Stand-by mandates: CPR Asset Management and Mandarine Gestion.
Lot 4 (around €140 million) Active fundamental SRI equity: non-benchmarked Europe listed small caps
Active mandate: collaboration between Paris-based BFT Investment Management and London-based small-cap specialist Montanaro Asset Management.
Stand-by mandates: Kempen Capital Management and La Financière de l’Echiquier.
Lot 5 (€250 million – €1 billion) – Active fundamental SRI equity: non-benchmarked, eurozone mid and large caps
Active mandate: Candriam.
Stand-by mandates: NN Investment Partners and Comgest.
ERAFP said that for its non-benchmarked mandates, the fund had sought fundamental equity research where stock selection is based on clear deep company research and regular contact with company management.
In 2005, ERAFP introduced an SRI Charter for 100% SRI investments based on a best-in-class investment strategy favouring investment in companies with strong relative ESG scores.
In December last year, ERAFP updated its SRI charter with a notable toughening of its investment engagement strategy where it said non-response by companies could lead to them being excluded from its portfolio: Link
The fund has also been increasing its research into environmental risk and opportunity and in January has announced the winners of a tender for consultancy companies specialised in research on the theme of climate change: Link