France’s RAFP tenders for almost €3bn in new SRI Euro bonds and Asia-Pac equities

Fund will hire five new managers and award three stand-by contracts as diversification programme continues apace.

RAFP, the €16bn Paris-based French Public Service Additional Pension Scheme – a 100% SRI pension fund – is tendering for eight new investment mandates – five main contracts and three stand-by briefs – worth almost €3bn, in two new buckets comprising Asia-Pacific SRI Equities and Euro-denominated SRI bonds, as it continues a major programme of geography and investment style diversification. The French fund will hire three new fund managers and award two stand-by mandates for the huge new €2.5bn allocation to Euro-denominated SRI corporate bonds. RAFP said the selected managers would run credit portfolios consisting essentially of investment grade titles, but that the portfolio could also diversify into non investment grade credits and private placements of the EuroPP type often used by insurance companies. Each new SRI bond mandate, for a term of five years with possible extensions, will be seeded with a minimum of €400m in assets and will follow a “buy and hold” investment style in order to maximise yields at the time of purchase and minimise default risk. For the second bucket, RAFP will hire two fund managers for a total of €400m in assets in the new Asia-Pacific SRI Equities allocation and sign one stand-by manager contract for the same investments. The mandate durations are again five years with possible roll over. The target for the mandates will be to outperform the MSCI AC Asia Pacific index over the long term.The move into the Asia-Pac region is one of ERAFP’s most geographically diverse allocations to date. The fund notes that investment into OECD countries in the region – Australia, Japan, New Zealand and South Korea – should make up the lion’s share of the portfolios and that the selected managers should make the respect of international human rights and environmental standards a key part of the companies invested in and subsequent investor/company dialogue. RAFP has been busy broadening its investment universe this year and in April announced a tender for approximately €400m worth of SRI corporate bonds in US Dollar denominated mandates comprising three manager briefs and two stand-by contracts.
 The French fund runs all its tenders in-house without the use of an external investment consultant.
RAFP is one of the largest public pension funds in the world in terms of members with nearly 4.5 million beneficiaries, 45,000 employers and close to €1.77bn in contributions each year. A mandatory, points-based pension scheme, since 1 January 2005 RAFP manages the supplementary pension benefits for civil servants, local authorities and the public hospitals sector. 

For more information, RAFP can be contacted at the following link