France’s ERAFP awards three US dollar-denominated SRI bond mandates

Fund taps AXA with stand-by mandates going to Loomis Sayles & UBS’s CCR

ERAFP, the €20bn French public service additional pension scheme that is a 100% socially responsible investing (SRI) fund, has awarded three US dollar-denominated SRI bond mandates.

The active mandate goes to AXA Investment Managers Paris, which will delegate financial management to AXA Investment Managers Inc. The stand-by mandates have been awarded to Natixis Asset Management (Loomis Sayles) and CCR Asset Management (UBS Global Asset Management Americas Inc.). The mandates are for a five-year period.

The move by the Paris-based fund, which has nearly 4.5m beneficiaries and close to €1.77bn in annual contributions, comes as part of its policy to broaden its investment universe and in line with the five values of its SRI Charter.

It follows an open call for tenders launched in April this year.

The portfolios will be invested mainly in dollar-denominated bonds from issuers registered in OECD countries, other than for securities issued or guaranteed by a sovereign state or local authority, and will be hedged against foreign exchange risk.
Each mandate-holder will build the portfolio basedmainly on a fundamental analysis of issuers and a technical analysis of the bonds concerned, to achieve broad sector diversification whilst ensuring compliance with ERAFP’s SRI requirements.

The investment firm will be required to perform its own analysis of each investment line in the portfolio having regard to ERAFP’s SRI Charter, possibly with the aid of third-party service providers.

In December last year ERAFP awarded US equities mandates to Natixis Asset Management and Robeco Institutional Asset Management.

The fund has been in the news recently as a leading advocate of the ‘Montreal Carbon Pledge’ launched at the PRI in Person event which commits investors to measuring and disclosing the carbon footprint of their portfolios.

And it has also made headlines with the news that Éric Loiselet, Member of its Board of Directors and Chairman of its Investment Policy Monitoring Committee dramatically pulled out of the election campaign for the Advisory Council to the United Nations-supported Principles for Responsible Investment (PRI). He had failed to get backing from the fund’s board for his candidacy.