National Employment Savings Trust (NEST) Corporation has finalised on the five default fund managers for its first set of five mandates and they will provide the framework for the company’s yearly target date funds (the default fund offerings).
The five mandates are as follows:
First Mandate: Passive global equities fund
UBS Life World Equity Tracker – A product of UBS Global Asset Management Life, it mirrors the FTSE All World Developed Index.
Second Mandate: Passive Gilts in UK
State Street UK Conventional Gilts All Stocks Index Fund – The fund follows the FTSE Actuaries UK Gilts All Stocks Index.
Third Mandate: Passive Index Linked Gilt in UK
State Street UK Index Linked Gilts over 5 Years Index Fund – the fund mirrors the FTSE Actuaries UK Index-Linked Gilts over 5 years Index.
Fourth Mandate: Cash (Sterling)
BlackRock Aquila Cash Fund: The fund maintains a portfolio of high quality sterling short term ‘money market’ instruments with the aim of preserving capital and providing adequate liquidity, while ensuring maximum current income.
Fifth Mandate: Diversified Beta
BlackRock – Aquila Life Market Advantage Fund: The fund invests in a wide range of asset classes, primarily through Blackrock’s collection of pooled index funds and is managed by BlackRock asset Management Pensions. The funds objective is to deliver returns equivalent to a 60% equity and 40% bond portfolio over long term, with 40% lower risk. The fund has an enhanced risk management focus and aims to reduce portfolio risk at market extremes.
Aon Hewitt helped Nest’s Investment and Procurement teams in preparing a short list of suitable pooled fund managers.
Nest may incorporate active investment strategy in the future once the scheme grows although initially the mandates have been for passive management.
Nest has also invited proposals from a socially responsible investment fund and a Sharia-compliant fund and hopes to complete the process by March-April 2011.
“Nest is on track. We are getting the infrastructure in place now so that we can test the systems and be ready to accept our first contributions later this year. I am really pleased with the quality of the managers who want to work with us. We are gathering together an impressive collection of global leaders to work with us to deliver Nest”, said the chief executive of Nest – Mr. Tim Jones.
Added Mark Fawcett – Chief Investment Officer “The infrastructure we are putting in place will give our members access to a diverse set of global asset classes, through Nest-constructed yearly target date funds, which will help us to manage investment risks in a way that’s appropriate for them”.
Charting the future course, Juliet Bullick – head of BlackRock’s UK institutional business said: “The pensions regulation that becomes effective in 2012 will mean more people in the UK have the opportunity to become members of a pension scheme than ever before. BlackRock is delighted to have been chosen by Nest to help millions of people build a better financial future”.
“As long-standing players in the UK pensions industry, we are highly supportive of Nest’s mission to provide access to funded pensions for all. We are excited to have the opportunity to provide the core equity holding and a potential long-term growth engine for investors”, said John Nestor – head of UK operations at UBS Global Asset Management.
“We are delighted to have been awarded two fixed income mandates by NEST. State Street Global Advisors has a long history working with many of the world’s largest pension funds managing a range of investment strategies to deliver on our clients’ investment objectives”, added Kanesh Lakhani – head of UK operations at State Street Global Advisors.