| The Environment Agency wraps up the implementation of its new investment strategy |
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| 24/07/2005 | |
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Britain's Environment Agency (EA) has completed its fund manager line-up with two more appointments, bringing to eight the total number of investment companies assigned to its £1bn Active Pension Fund. The EA undertook a complete investment overhaul with a new focus on specialist mandates back in May 2005 with the dismissal of its three balanced managers (Legal & General, Henderson, and Merrill Lynch). The main aim of the new investment strategy is to enhance the disappointing returns of its Active Pension Scheme under balanced management, while diversifying its assets and spreading risks by investing in property and private equity. After the evaluation of tenders from nearly 40 property and private equity managers, the last two mandates went to Morley Fund Management and Robeco, which have been appointed to manage £60 million or around 5% each of the Active Pension Fund's assets in segregated multi-manager accounts. Both mandates are related to the environment sector, in line with the EA's strategy of increasing its Active Pension Fund's environmental activism. Morley Fund Management will be investing in around 12 UK property funds, including the Igloo Regeneration Fund that invests in disused brownfield sites, to give the Active Pension Fund a broad exposure to the UK property market. Robeco will invest in a variety of sustainable private equity funds in Europe and the United States with a bias towards energy, water, waste, food and health sectors. Approximately 30% will be allocated to 'green' technology funds. New investment strategy All of the EA's new investment managers have been awarded three-year investment management agreements that are extendable subject to satisfactory performance. Each "active" style manager – there is only one that is not - has been set specific investment out-performance targets, and performance-related fees will only be payable if financial targets are met. Yet, the assessment of the manager's performance will not be limited to return measurement, but will also factor in the integration of the Active Pension Scheme's "environmental overlay strategy". This overlay strategy includes the integration of environmental considerations into risk management, stock selection, company engagement, and proxy voting, as well as referral of any environmental resolutions to the EA. Their relative performance will also be benchmarked using corporate governance and socially responsible investment indices, and environmental reporting tools. The EA is currently drafting a short report on its experience of changing its entire investment strategy and implementing an environmental overlay strategy that should be available later in the summer. Julien Laplante |
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Articles of the same Topic : Pension funds UK
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