Pension fund management services

Tender description

The Hampshire pension fund was valued at 6 600 000 000 GBP at its last financial year end in March 2018 and has a strategic asset allocation to multi-asset credit of 10 %, which is a new addition to its investment strategy. The Pension fund will appoint a maximum of three investment managers to manage the multi-asset credit mandates. The overall mandate objective is to achieve a return of UK 3 month LIBOR plus 3-5 % per annum net of fees, over 3 and 5 year rolling periods. The mandate should seek to achieve its return objective by investing primarily in a portfolio of high yield fixed and floating rate corporate debt instruments issued by North American and European companies. The Hampshire Pension Fund was valued at £6.6bn at its last financial year end in March 2018 and has a strategic asset allocation to multi-asset credit of 10 %, which is a new addition to its investment strategy. The Pension Fund will appoint a maximum of three investment managers to manage the multi-asset credit mandates. The overall mandate objective is to achieve a return of UK 3 month Libor plus 3-5 % per annum net of fees, over 3 and 5 year rolling periods. The mandate should seek to achieve its return objective by investing primarily in a portfolio of high yield fixed and floating rate corporate debt instruments issued by North American and European companies. The mandate’s investment in corporate debt instruments will include senior secured loans, second lien loans, senior unsecured and subordinate loans and senior secured and unsecured high yield bonds. The mandate’s corporate debt investments are expected to be largely sub-investment grade rated, i.e. below BBB. Exposure to lower yielding investment grade credit markets will be a function of volatility management rather than for income generation. The mandate may also invest on an opportunistic basis (for up to 25 % of the portfolio) in other debt instruments such as, but not restricted to: structured credit products and securitised assets (including debt and equity tranches of collateralised loan obligations, mortgage backed securities and other asset backed securities) corporate debt instruments issued by companies outside North America and Europe, stressed and distressed corporate debt instruments, corporate debt instruments from Emerging markets, payment-in-kind corporate debt instruments, preferred stock, common equity and other equity instruments where associated with issuers of high yield debt instrument, investment grade credit issued within North America and Europe any less liquid credit, such as distressed debt, should be limited to up to 10 % of the portfolio. All currency exposure must be hedged back to Sterling. Derivative use should be limited to efficient portfolio and risk management including managing currency exposure and downside credit risk protection. Interest rate duration should be in the region of 2 years given the floating rate nature and short duration of the underlying assets, with a maximum and minimum range of 0 to 5 years. The following minimum standards are required for this search: The Pension fund will consider investing on a segregated or pooled fund basis. Any pooled fund must have a minimum of monthly liquidity. To demonstrate the necessary track record in order to apply Investment management companies (IMC) should manage a minimum of 3 000 000 000 GBP in actively managed multi-asset credit mandates and, at a minimum, have a lead manager who has managed global multi-asset fixed income mandates for more than 10 years and have a track record of more than 3 years within your IMC. Management fees including all other fees and expenses should be below 50 basis points (0.5 %) of assets under management in the award portfolio per annum. The investment team responsible for delivering the mandate must also have experience in managing portfolios of primarily high yield fixed income assets, including but not limited to; fixed and floating rate corporate debt instruments issued by North American and European companies, debt instruments will include senior, unsecured and subordinate loans as well as bonds, the average credit rating is expected to be sub-investment grade, exposure to investment grade credit markets will be a function of volatility management rather than for income generation. Investment managers must have proven credentials and track record in investing in the above markets, including work-out experience and must also exhibit superior default and recovery experience, relative to the underlying credit markets.