The French public sector additional pension scheme, ERAFP, has awarded three mandates to firms to manage US equity portfolios totaling around €1.26bn.
It launched a call for tenders in March 2020, following the expiration of its 2013 mandates. It had a view to award mandates for, lot 1 – the management of US mid-cap equity portfolios, and, lot 2 – the management of US large-cap equity portfolios.
Following the selection process, ERAFP decided to award the three active management mandates as follows: lot 1 to BFT IM (financial management delegated to Morgan Stanley IM); lot 2 to Ostrum AM (financial management delegated to Loomis Sayles); and, Oddo BHF AM (financial management delegated to Wells Cap Management).
By developing a conviction-driven management approach based on in-depth analysis of the securities in the portfolio, ERAFP said its chosen asset managers will aim to outperform the benchmark, namely the Russell Mid Cap index for lot 1 and the MSCI USA index for lot 2, over the long term.
The portfolio's composition, to be determined by the investment firms, but it must comply with ERAFP’s socially responsible investing (SRI) framework.
The asset managers must therefore analyse each company in their portfolio in the light of the environmental, social and governance (ESG) criteria set out in ERAFP’s SRI framework and encourage them to adopt best ESG practices through shareholder dialogue. The managers must also support ERAFP in achieving its climate change mitigation objectives.
As an indication, the overall investment amount for the US mid-cap mandate will be around €150m, and that for the two large-cap mandates will be around €1.1bn. The mandates are for an initial term of five years; ERAFP may renew the contracts for two successive one-year periods, giving a maximum possible term of seven years.
In addition, four stand-by mandates were awarded respectively to, Schroder IM and Amundi AM for lot 1 and to Sanso IS (financial management delegated to Clearbridge) and Blackrock for lot 2, and may be activated by ERAFP if it deems it necessary.
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