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RI mandate round-up: France’s ERAFP outsources €1.2bn

French fund to stagger SRI equity and bond mandates over three years.

SRI fund managers have started chasing one of the biggest lots of responsible institutional mandates placed in the market this year, following the announcement by ERAFP, the €4.7bn French civil servant’s pension fund that it is to outsource €1.2bn ($1.9bn) in international equities and euro-denominated fixed income mandates.
The fund, France’s second largest, runs its entire investment portfolio on an SRI basis following internal criteria on which companies and bond issuers it can invest in. ERAFP said the investments would be staggered over three years. About €150m will be invested annually in three international equities mandates (ex emerging markets) and approximately €250m per year allocated to two mandates focused on financial instruments based on euro-denominated investment grade bonds.
The money will be drawn from internally managed government bond portfolios, which made up 78% of the fund’s assets at the start of this year. ERAFP said it expected to start hiring managers in September.
The fund last year outsourced four euro equities mandates to BNP Paribas Asset Management, Robeco, IDEAM (part of Credit Agricole Asset Management) and Pictet Asset Management.
Isabelle Szendy, deputy chief executive of the fund, said the fund was also planning to diversify into other assetclasses: “We are currently considering the necessity of widening our investment universe in order to increase this asset diversification beyond 2008.” ERAFP, which was set up in 2005, receives pension contributions of over €1.5bn each year.
Eurofer, the €300m defined contribution pension plan for Italian railway and transport workers, which has stipulated responsible investment guidelines for its investment managers since it started in 2004, is tendering new mandates in equities and bonds. Riccardo Cesari, chief investment officer at the fund, said the new mandates would comprise a new investment option for its 44,000 members. The new investment option will be split between 50% equities and 50% bonds. The fund’s two current DC options both invest heavily in bonds. Cesari said the fund was also considering investments in real estate and private equity.
PensionDanmark, the DKr70.4bn (9.4bn) Danish pension fund, is seeking to hire a custodian or corporate governance agency to handle voting on its listed equity investments. A spokesman for the fund said: “We are having conversations with a few providers in order to expand our own knowledge of the area before we sign up to the UN Principles for Responsible Investment later this year. We want to ensure that we can meet UNPRI governance requirements before we sign.”