French public pension scheme Ircantec, which has responsible investment principles as a significant part of its manager selection criteria, has awarded a €1.2bn sovereign bond mandate to Allianz Global Investors, Responsible Investor can reveal.
The €10bn scheme, which is managed by France’s sovereign wealth fund Caisse des Depots et Consignations, put out a tender in February to find an external manager to run its sovereign bond fund alongside a risk overlay for its entire global portfolio – to hedge against turbulent market conditions in the future.
The overlay requires collateral, for which Ircantec decided to use its sovereign bond exposure, rather than cash. The overlay will require no environmental, social and governance alignment, but the bond portfolio – as with all of Ircantec’s investments – will have to include considerations around the ESG the credentials of the issuing government. This was part of the manager selection process.
The new contract is part of an overhaul at the scheme, which decided earlier this year that it would reduce its emphasis on government bonds, cutting its allocation from 30% to 10%.
Ircantec has also announced that Amundi will run its green bond portfolio, in the form of a new dedicated fund. The mandate does not include new cash, but will enable Ircantec to bundle its existing €250m of green bond investments into one vehicle, with a view to improving the management and being more rigorous in its selection process.More than 10 external managers applied for the contract, which was awarded this summer, but Amundi won on price and “follow-up processes” for managing green bonds, said Caroline Le Meaux, Head of Delegated Management at Caisse des Depots et Consignations.
For further details, see here. Amundi previously ran an aggregate bond fund for Ircantec, which expired recently after four years. There are no plans to renew the contract, Le Meaux told RI, because there will be no aggregate bond portfolios under the overhauled investment strategy.
The two new mandates come as Ircantec confirmed plans to appoint two further external managers to run two quant equities strategies for OECD countries excluding Europe, each valued at €400m (see RI report here).
Further decisions are not expected until next spring.
Ircantec (L’institution de Retraite Complémentaire des Agents Non Titulaires de l‘État et des Collectivités Publiques) is a pay-as-you-go second pillar pension structure created in 1970. It covers local politicians and staff at companies such as EdF and GdF, the big French utilities, and the Banque de France. Its €9.8bn treasury is its contributions buffer for future pension payments.