INVESTMENT AWARDS
Winners Supplement
037_PP_Feb21.indd 37 01/02/2021 15:26 Helping you BUILD YOUR PORTFOLIO through the complexities of pension investment
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INVESTMENT AWARDS Contents
CONTACT 40 Roll of honour 48 Sustainable Equity Manager of the Year Professional Pensions, New London House, 172 Drury Lane, London WC2B 5QR 42 Multi Asset/Sector Credit An interview with Marianne Harper Gow phone Prefix phone numbers with 020 7484 of Baillie Gifford unless specified otherwise Manager of the Year email [email protected] An interview with Campe Goodman of web professionalpensions.com 50 UK & European Commercial @profpensions Wellington Management twitter Real Estate Debt Manager of Editorial 43 Multi-Asset Manager the Year editor Jonathan Stapleton, 9747 of the Year An interview with Jim Blakemore of deputy editor James Phillips, 9799 BentallGreenOak news editor Hope William-Smith, 9754 An interview with Andrew Brown of correspondent Holly Roach, 9814 Columbia Threadneedle Investments production editor Andrew Ryan, 9847 52 UK Equity Manager design consultant Andy Cowles editorial director Adrian Barrick, 9863 44 Pan-European Core Property of the Year Manager of the Year An interview with Andrew Brown of Sales An interview with Jorge Duarte And James Columbia Threadneedle Investments sales director Liam Barrett, 9977 Whittaker of Barings account managers Hannah Heath, 9865; 54 Target Date Fund Will Bolton, 9796 production manager Rachel White, 9779 46 Sustainable Corporate Bond Manager of the Year chief executive Jonathon Whiteley, 9745 Manager of the Year managing director Kevin Sinclair, 9891 An interview with David Hutchins of An interview with Sebastien Proffit of AllianceBernstein AXA Investment Managers Subscriptions 55 AllianceBernstein subscriptions CorpSubsProPensions @incisivemedia.com, 9794 47 AXA Investment Managers How target date funds can crack the controlled circulation Joshua Wrazen, Looking to the future value-for-money conundrum 9995. [email protected] prices One year – UK: £599. Make cheque payable to ‘Incisive Business Media Ltd’ and send to: Incisive Media, Tower House, Lathkill Street, Sovereign Park, Market Harborough, LE16 9EF reprints and e-prints Media Licensing Co. 020 3773 9320. [email protected] Awards Willis Towers Watson Trade Pensions Journalist of the Year James Phillips, 2019. SPP Trade Journalist of the Year Jonathan Stapleton, 2011, 2014, and 2019, James Phillips, 2018. Investment Association Trade Journalist of the Year Jonathan Stapleton, 2015. Willis Towers Watson Investment Publication of the Year Professional Pensions, 2016. State Street UK Institutional Press Awards Outstanding Contribution to Institutional Journalism Jonathan Stapleton, 2017. MHP Young Journalist Awards Gold Winner James Phillips 2018. Kames Capital Journalism Awards: Institutional Team of the Year Professional Pensions, 2016, 2017, 2018, and 2019. Institutional Journalist of the Year James Phillips, 2019. Principal sponsor:
Average net circulation for the period 1 July 2018 to 30 June 2019: 8,197. ISSN-1743 3320. Printed by Stephens & George Ltd. Published by Incisive Business Media Ltd. Copyright Incisive Business Media (IP) Ltd. All rights reserved
February 2021 PROFESSIONAL PENSIONS 39
039_PP_Feb21.indd 39 01/02/2021 17:56 PP INVESTMENT AWARDS WINNERS Roll of honour
The winners of the PP Investment Awards 2020 – which celebrated excellence among the asset managerssdf who serve UK occupational pension schemes – were unveiled on 3 December last year in a special digital eBook presentation (see: bit.ly/3qCng86). The PP Investment Awards process is unique within the industry – with the shortlist being drawn up in association with Aon, one of the leading investment consultants in the market – highlighting those asset managers who have demonstrated excellent performance, and is broadly based on performance over the 12 months to 30 June 2020. Shortlisted entrants were then asked to complete an entry detailing how they differentiated themselves from their peers – detailing the product and client service innovations they had made over the year in question. The winners in each category were then decided by a distinguished panel of independent industry judges (see opposite page).
Alternative Risk Premia Equity Factor Index Hedge Fund Manager of l Legal & General Manager of the Year Provider of the Year the Year Investment Management Winner: GAM Investments Winner: Research Affiliates Winner: Hudson Bay l M&G Investments (RAFI) Capital Management Finalists: Multi Asset/Sector l GAM Systematic Finalists: Highly Commended: l L GT l ERI Scientific Beta BlueBay Asset Management Credit Manager of l Lombar d Odier l MSCI the Year Finalists: Wellington Investment Managers l R esearch Affiliates (RAFI) l Adelphi Capital Winner: Management l Syst ematica Investments l BlueBay Asset Global Equity Manager Management Finalists: ARBS (Absolute Return of the Year l Br evan Howard l J.P. Morgan Asset Bond Strategy) Manager Winner: Baillie Gifford l Caxt on Associates Management of the Year l Gladst one Partners l M uzinich Finalists: l Winner: Pictet Asset l Baillie Gifford l H udson Bay Capital PIMCO l Management l Bar on Capital Management Schroders l W ellington Management Finalists: l Jennison Associates l Pictet Asset Management l M organ Stanley Investment Liquid Securitised l R eams Asset Management Management Manager of the Year Multi Asset Manager of l T . Rowe Price l Sands Capital Management Winner: TwentyFour Asset the Year l UBP Asset Management l T . Rowe Price Management Winner: Columbia l W ellington Management Finalists: Threadneedle Investments Global Fixed Income l Aegon Asset Management Finalists: Emerging Market Equity Manager of the Year l Insight Investment l BlackRock Manager of the Year Winner: Insight Investment l Janus Henderson Investors l Columbia Threadneedle Winner: Morgan Stanley Highly Commended: l M&G Investments Investments Investment Management PGIM Fixed Income l T wentyFour Asset l Legal & General Finalists: Finalists: Management Investment Management l Artisan Partners l Goldman Sachs Asset l R uffer l Carmignac Risk Managers Management Long Income Property l M organ Stanley Investment l Insight Investment Manager of the Year Pan-European Core Management l PGIM Winner: Aviva Investors Property Manager of l Sands Capital Management l UBS Asset Management Finalists: the Year l W illiam Blair l W ellington Management l Aviva Investors Winner: Barings
40 PROFESSIONAL PENSIONS February 2021
040-041_PP_Feb21.indd 40 28/01/2021 16:06 Finalists: l Barings l CBRE Global Investors l LaSalle Investment Management Sustainable Corporate Bond Manager of the Year Winner: AXA Investment Managers Finalists: l AXA Investment Managers l Columbia Threadneedle Investments l PIMCO l R obeco Sustainable Equity Manager of the Year Winner: Baillie Gifford Finalists: l Baillie Gifford l Janus Henderson Investors l ICG-Longbo w UK Fixed Income DC CATEGORIES l M irova l PGIM Real Estate Manager of the Year l NN Investment Partners Winner: Insight Investment DC Investment l O wnership Capital UK Core Property Innovation of the Year l R obeco Finalists: Manager of the Year l Aegon Asset Management Winner: BNP Paribas Asset Schroders Management UK & European Winner: l BlackR ock Finalists: l F idelity Investments Finalists: Opportunistic Property l l l Manager of the Year Federated Hermes Insight Investment Baillie Gifford l Schr oders l Janus Henderson l BNP Paribas Asset Winner: CapMan Real l UBS Asset Management Investors Management Estate l M&G Investments l N ordea Asset Management Finalists: UK Equity Manager of l R obeco l Blackstone the Year UK LDI Manager of l CapM an Real Estate Winner: Columbia the Year Target Date Fund Threadneedle Investments Winner: Insight Investment Manager of the Year UK & European Winner: Alliance Bernstein Commercial Real Estate Finalists: Finalists: l Baillie Gifford l BlackRock Finalists: Debt Manager of the l BlackR ock l BMO Global Asset l Alliance Bernstein Year l Columbia Threadneedle Management l BlackR ock Winner: BentallGreenOak Investments l Insight Investment l N est Finalists: l Liontrust l Legal & General l Stat e Street Global l BentallGreenOak l Lindsell Train Investment Management Advisors
THE PPIA JUDGES The PPIA Judges
Alison Bostock, Ian McKnight, Susan Mark Hedges, client director chief investment Andrews, chief chief investment at PTL officer at the operating officer at the Royal Mail officer at Ross Nationwide Pension Plan Trustees Pension Fund
February 2021 PROFESSIONAL PENSIONS 41
040-041_PP_Feb21.indd 41 28/01/2021 16:06 PP INVESTMENT AWARDS WINNERS
Multi Asset/Sector Credit Manager of the Year
WINNER INTERVIEW – CAMPE GOODMAN
What does it mean to win decisions. While we consider Sustainably aligned invest- this award? both transitional and physical ment solutions remain a firm Wellington’s ethos has always climate risks, our investment priority for the schemes we been to put our clients first, and research collaboration with work with and we continue to we’re extremely proud to have Woodwell Climate Research consider ESG issues as part of been recognised for the value we Center, a leading climate the overall research process, have brought to our multi-sector science institute, gives us devising innovative ways clients credit clients over the past year. market-leading insights into can better align their invest- We will continue to partner with impacts of physical climate ments with their beliefs. pension schemes on their long- change on securities we hold. While ESG factors are term goals, through building In partnership with some of considered as part of security bespoke solutions and delivering our multi-sector credit clients, selection, they will not neces- strong investment outcomes. we have worked on a portfolio sarily result in the exclusion of construction approach which an issuer or security from the What do you believe sets you targets the same risk and return investment universe. apart from your peers? objectives as their existing We believe two key areas set us portfolios, while aligning better How will you continue to apart: our investment platform; with their views on ESG factors. improve your services over the coming 12 months? Campe Goodman is a fixed and our work on ESG and The approach has restrictions income portfolio manager at sustainability. on fossil fuels, weapons and Our clients face increasing Wellington Management To take advantage of oppor- tobacco, while also allocating to demand for ESG and climate tunities and navigate envi- a basket of impact bond “best reporting. We are committed ronments like 2020 requires a ideas”. This portfolio construc- to exceeding their require- strong credit research platform. tion exercise has reduced the ments by providing transpar- Our analysts often cover the carbon footprint of these portfo- ent and meaningful assessment same industry for decades, lios by more than 50%. and reporting for our portfo- bringing unrivalled industry lios. We are also helping them and company knowledge. Their What are the key challenges to meet their upcoming obliga- collaboration with our equity facing your scheme clients? tions for the UK Stewardship analysts aids our holistic assess- Our UK pension clients face Code and the Task Force on ment of companies. multi-faceted challenges, and Climate-related Financial During 2020’s volatility, we believe a multi-sector credit Disclosures. our fundamental research and allocation can play a useful role. Increasing numbers of sector rotation skills enabled • We allocate to the high- schemes are making a com- us to rotate from a defensive er-yielding fixed income mitment to net zero carbon position into promising ideas in sectors, providing yield in a emissions. Given our large dislocated areas. Our approach low-yield environment. presence in equity markets and balances structural themes with • We invest across more the long-standing relationships cyclical strategies and oppor- liquid public credit sectors, we foster with companies, our tunistic positions, reducing complementing illiquid allo- ability to engage for our fixed SHORTLIST reliance on any single invest- cations and providing a source income clients will be critical l J .P. Morgan Asset ment horizon. of funds for locking in longer- for creating real world decar- Management Wellington has dedicated dated spreads. bonisation over time. In 2020, l teams of both ESG and climate • We target equity-like we became a founding member Muzinich research specialists. Our invest- returns with muted volatility, of the Net-Zero Asset Manager l PIMCO ment teams use this proprie- helping schemes to de-risk from Initiative, committing to support l Schroders tary ESG and climate research equities when funding levels the goal of net zero greenhouse l W ellington Management to make better-informed remain challenged. gas emissions by 2050.
42 PROFESSIONAL PENSIONS February 2021
042_PP_Feb21.indd 42 27/01/2021 13:11 PP INVESTMENT AWARDS WINNERS
Multi-Asset Manager of the Year
WINNER INTERVIEW – ANDREW BROWN
What does it mean to win What are the key challenges analysis on how a company this award? facing your scheme clients manages ESG risks, into a Winning this award is a and how are you helping single, forward-looking rating testament to the strength of them address these issues? (1 to 5). Development of this our multi-asset team and the Our pension scheme clients are tool reflects our conviction entire investment function that faced with multiple challenges, that prudent management contributes to the consistency including enhanced regulatory of financial and RI factors of our performance. These and fiduciary duties placed on is critical to a company’s strategies are playing a valu- trustees and governing pension, sustainability. able role in enabling defined and the adverse impact this Enhancing our intensive benefit schemes and defined pandemic has had on funding internal research, the ratings contribution members achieve levels in the face of a fragile UK provide us with unparalleled their long-term goals. We are economy. understanding of where RI risks delighted to receive this award As we enter a challenging within our dynamic real return and to be recognised. period for the global economy, strategy are concentrated, from an awareness of risk and the bottom up. Equally impor- What do you believe sets you dynamic asset allocation (as has tant was ensuring we can effec- apart from your peers and been recognised by this award), tively communicate the results contributes to this success? enables participation when risk to our investors, giving them Andrew Brown is institutional Consistency forms the basis of is being rewarded and pro- comfort that we are genuinely business director at Columbia our approach, which has been tection of assets in uncertain incorporating ESG analysis at Threadneedle Investments tried and tested at Columbia markets. In short, we aim to every stage of the investment Threadneedle Investments for help our clients navigate these process, not merely ticking 25 years. Asset allocation is a key markets. a regulatory box. With this part of our DNA and something enhanced tool, we continue to that we are proud of as we How will you continue to be completely transparent with continue to improve and refine improve your services to our investors’, helping them the process rather than enact scheme clients over the understand the risks taken with any revolutionary change. coming 12 months? their capital. Our active, research-driven Increased regulatory scrutiny Our programme of webinars strategies blend an optimal has put growing pressure on over the course of 2021 will mix of investments to deliver pension schemes to integrate continue to focus on invest- targeted returns, while draw- responsible investment (RI) ment matters that are key ing on the scale and diversity into their investment approach. to pension scheme decision of Columbia Threadneedle’s Welcoming the opportunity makers. Our fund managers wider investment platform and to help our clients comply, are keen to engage and interact sophisticated risk management we launched an innovative with clients to ensure trans- framework to enable a complete proprietary RI ratings system, parency and an understanding look-through risk analysis on combining an assessment of of our approach to managing positions held within funds. financial stewardship with their assets. SHORTLIST As an ‘all weather’ manager, Important information: For use by professional clients and/or equivalent investor types in your we utilise our products’ flexi- jurisdiction (not to be used with or passed on to retail clients) l BlackR ock bility, dynamically altering their This is an advertising document. Past performance is not a guide to future performance. l Columbia Threadneedle Your capital is at risk. The value of investments can fall as well as rise and your clients may portfolio risk-budgets to partic- get back less than invested. This material is for information only and does not constitute an Investments offer or solicitation of an order to buy or sell any securities or other financial instruments, or to ipate in growth opportunities, provide investment advice or services. Threadneedle Asset Management Limited, Registered l L egal & General but protect when threats appear, No. 573204, both registered in England and Wales. Cannon Place, 78 Cannon Street London Investment Management and this is evidenced through an EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and l Ruffer excellent long-term track record. Threadneedle group of companies. columbiathreadneedle.com
February 2021 PROFESSIONAL PENSIONS 43
043_PP_Feb21.indd 43 01/02/2021 15:29 PP INVESTMENT AWARDS WINNERS Pan-European Core Property Manager of the Year
WINNER INTERVIEW JORGE DUARTE AND JAMES WHITTAKER
What does it mean to win multiple offi ces across seven coupled with solid and this award? European countries, our local consistent levels of cash income. We are extremely honoured presence is fundamental to the to have been selected for this identifi cation and execution of How will you continue to award from our peer group, deals – both on and off -market. improve your services to especially as we operate in a The combination of top- pension scheme clients over highly competitive market. Our down research forecasting the coming 12 months? Barings European Core Property and bottom-up local market We are seeing the same Fund (BECPF) has just passed knowledge enables us to source increased focus on ESG issues its fi fth anniversary, so it is both and price attractive opportuni- in the UK that we have seen very pleasing and rewarding that ties – and ultimately generate elsewhere from our European the team has been recognised alpha – while implementing the institutional clients in recent for our continued eff ort to fund’s strategy. years – and with this, the deliver strong investment BECPF also implements an growing burden of responsibility performance for our clients. active core strategy that seeks on UK pension trustees to to enhance returns through report on such matters. What do you believe sets proactive asset management, At Barings, ESG is a fun- you apart from your peers to drive additional income and damental component of our and contributes to this value. investment process – at the success? The depth and breadth of property level, during due dil- Barings Real Estate (BRE) our European platform, as well igence and through the annual has been at the forefront of as our local presence, allows business plan. However, we helping investors fi nd sources the active core strategy of the also recognise that we need to of income and appreciation fund – where the BRE team constantly improve the level of through diversifi ed exposure is in control of the complete ESG reporting we provide to our to core real estate across major investment and asset manage- clients to help them meet their European markets. ment process – to be realised. own reporting requirements. Our investment process is This facilitates the successful While we have made good research-led. We have 12 ded- implementation of the business progress on this, with ambitions icated research professionals plans for the fund’s assets. to maintain our position at the Jorge Duarte (top) and James globally, including three analysts forefront of the industry, we Whittaker (bottom) are managing focused solely on Europe. As What are the key challenges believe there is more to be done. directors and BECPF portfolio part of our investment process, facing your pension scheme managers at Barings our team relies on two innova- clients and how are you tive, proprietary tools. The fi rst helping them address these is a relative value model, which issues? ‘With multiple compares real estate opportu- One of the key challenges nities globally using a combi- our pension clients continue offi ces across nation of quantitative factors to face is ensuring they are Europe, our – such as historical pricing and making meaningful progress qualitative analysis. Secondly, towards their long-term funding local presence is we produce European city objectives, while at the same SHORTLIST profi les, which track the cyclical time safeguarding the immediate fundamental to and structural trends of over 40 demands on their cashfl ow. ● Barings European cities. At Barings, we strive to create the identifi cation ● CBRE Global Investors One of BRE’s main com- robust, active solutions to these and execution ● LaSalle Investment petitive advantages is its local challenges, which can deliver Management deal sourcing capability. With long-term capital appreciation of deals’
44 PROFESSIONAL PENSIONS February 2021
044-045_PP_Feb21.indd 44 27/01/2021 10:47 VIA POLA | MILAN, ITALY | MILAN, POLA VIA
BARINGS REAL ESTATE
We’ve learned over the last 25 years that it takes experience and perspective to navigate through uncertain times. At Barings Real Estate, we harness the full breadth and depth of our $45+ billion real estate platform* to deliver our clients a more complete picture of the opportunities ahead, and the solutions designed to capitalize on them.
LOCAL MARKET EXPERTISE STABILITY FOR THE LONG RUN A SUSTAINABLE APPROACH Presence in 9 countries, with in- Backed by a strong parent company Taking ESG into consideration at each house capabilities from sourcing and with a long-term focus, and investing stage of investment, and focusing asset management to research and alongside our clients to help ensure on the long-term impact of every portfolio construction. an alignment of interests. decision we make.
BARINGS.COM
Barings Real Estate is a part of Barings LLC, a Registered Investment Adviser. *As of September 30, 2020. 20-1220215
READ, WATCH AND LISTEN TO OUR LATEST REAL ESTATE INSIGHTS PP INVESTMENT AWARDS WINNERS
Sustainable Corporate Bond Manager of the Year
WINNER INTERVIEW – SEBASTIEN PROFFIT
What does it mean to win wider spreads while increasing solutions that support schemes’ this award? regional diversification. long-term investment and net We are absolutely delighted. It is zero objectives. It’s another testament to our 20-year effort, What are the key challenges opportunity for us to deploy across all areas of our business, facing your scheme clients? the full weight of our investing to bring sustainable investment Many of the investment capabilities alongside our outcomes into the mainstream. challenges of recent years substantial responsible and We couldn’t have done this remain relevant. Schemes still credit research teams. without our clients. They have need sustainable cashflow We also want to build on put their faith in us and allowed generation to fund long-term our global fundamental credit us to build a powerful reputation pensioner payments in the expertise and industry leader- in one of the most dynamic parts “lower-for-longer” environ- ship in addressing climate-risk of the industry. ment. Meanwhile, DB-specific challenges. Our planned climate regulatory changes, such as the buy and maintain strategy will What do you believe sets you requirement to integrate ESG aim to capture the full premium apart from your peers? and climate-related risks into in global credit markets while Three things. Culture, client portfolios, must be addressed. helping finance the transition to focus and an unswerving long- Both require an under- a net zero carbon world. term commitment. standing of how they may Complementing our From senior leadership to impact clients’ objectives and low-carbon strategy develop- Sebastien Proffit is a fixed income solutions strategist at client and investment teams, strategies. Expertise and a long- ments, we continue to evolve AXA Investment Managers each of us knows the impor- term partnership approach our portfolio reporting with tance of listening to clients and then enable us to design a view to giving clients an working collaboratively to meet investment solutions to help extended range of climate-re- their evolving needs. These overcome them. lated performance indica- requirements have steadily Our core buy and maintain tors. These may include their shifted towards the integration credit approach, one of the investment carbon footprint, of environmental, social and main building blocks of our transition pathway and overall governance (ESG) factors, cashflow-driven investment portfolio temperature. and in recent years there has strategies, aims to overcome the While our 43-person credit been a far greater emphasis pitfalls of traditional active and research team scours the on climate-related risks. Our passive credit management by global fixed income universe teams approach each new client providing an efficient method for attractive opportunities, challenge with an innovative, to access return while mini- increasing attention is being ‘can-do’ attitude. mising the performance drag paid to heavy new issuance of Ongoing and proactive from transaction costs. The green and docial bonds. With engagement with clients also integration of ESG factors into ‘greenwashing’ a rising concern, means we can provide timely this fundamental investment our proprietary green, social inputs to aid investment deci- grade strategy further bolsters and sustainability bonds assess- sion making. In 2020, when its resilience and enhances risk ment frameworks are designed SHORTLIST spreads widened following the mitigation. to provide robust protection Covid-19 induced sell-off and from that risk. l AXA Investment USD-denominated bonds in How will you continue to As in every year, we must Managers particular were looking attrac- improve your services over stay innovative and committed, l Columbia Threadneedle tive, our rapid communications the coming 12 months? in responsible investment and Investments allowed us to highlight the In sustainable fixed income, beyond, to make sure we are l PIMCO opportunity, allowing many our focus is on developing helping our clients meet the l R obeco clients to benefit from the innovative outcome-oriented challenges of tomorrow, today.
46 PROFESSIONAL PENSIONS February 2021
046-047_PP_Feb21.indd 46 27/01/2021 13:10 AXA INVESTMENT MANAGERS INDUSTRY VOICE
Looking to the future
Lional Pernias of AXA Investment Managers looks at lessons from 2020
s a turbulent 2020 disappears in the ‘Clients had rear-view mirror and we look forward increased toA better years ahead, now is a appetite to useful time to reflect on the main UK pension scheme themes of embed ESG 2020. What lessons can we take from the trends around ESG considerations integration, cost reduction and non-sterling allocations? in their
RESILIENCE THROUGH ESG portfolios’ Throughout last year we saw increased appetite from clients to understand and embed chronic changes in the land- venturing outside of solely Both self-sufficiency and environmental, social and gov- scape for a given issuer or sterling credit allocations. buyout strategies require a ernance (ESG) considerations sector. Our commitment to We believe there can be clear high resilience to risk and low in their portfolios, and we fully meaningful and collaborative benefits to including a non- probability of drawdowns to expect this to continue. engagement with issuers also sterling allocation for UK maintain funding levels and In fixed income we believe helps to mitigate risks. Minimis- pension schemes. Accessing reduce future contributions ESG integration is a risk-mit- ing the impact of these down- the USD and EUR markets from the scheme sponsor. igation tool that can limit the side scenarios should help build delivers additional liquidity and Liquidity is also important. magnitude and probability of stability in our client portfolios. diversification – which should Self-sufficient schemes may downside scenarios. Our ESG play a role in reducing volatility favour the flexibility that framework first filters out COST-EFFICIENT ACCESS and drawdowns, a key factor in liquidity providesStuart to Hitchcock, change issuers that are particularly We see no sign of the low-yield cashflow generative portfolios. asset allocationhead or payof portfolio collateral management, exposed to controversies or environment abating in 2021, Opportunities can also emerge calls while schemes targeting private credit to ‘tail risks’ such as climate and it is understandable that in relative value terms, such as a buyout should benefit from change before an examination clients have sought to minimise in the first half of 2020 when the ease of selling high-quality of fundamental ESG risks costs associated with active USD spreads widened relative bonds when the risk transfer is carried out by analysts credit portfolios before heading to their UK and EUR peers. does takes place.Amie Stow, who already have a deep and down the ratings spectrum. One These lessonssenior from investment 2020 – thorough knowledge of the way clients have done this is to OUTCOME-DRIVEN about minimisingspecialist, downside private investment universe. implement buy and maintain INVESTMENT risks through creditESG, gaining We believe this approach – of strategies that benefit from Whatever 2021 brings we will efficient credit exposure and embedding ESG skills through the same fundamental credit continue to focus on delivering seeking global diversification – our investment teams rather research but which use inno- sustainable cashflows with a might just allowSamuel us all Jones, to look than housing them in a separate vative trading techniques and high degree of predictability forward to a moreportfolio positive manager, 2021. silo – allows us to better appre- careful management of turnover to meet our clients’ required private credit ciate the nuances of each issuer to avoid the high costs that can outcomes. For UK defined and sector. cannibalise active returns. benefit schemes these outcomes, Lionel Pernias This two-step approach or ‘endgames’, are often a Head of Buy aims to improve our chances GOING BEYOND STERLING buyout or self-sufficiency. and Maintain of avoiding acute credit events Our clients also sought to We believe buy and maintain Credit, London, from ESG factors as well as mitigate risk in 2020 by strategies are suitable for either. AXA Investment Managers For Professional Clients only. Not to be relied upon by Retail Clients. This communication is for informational purposes only and does not constitute an offer to buy or sell any investments, products or services and should not be considered as a solicitation or as investment advice. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. The strategies discussed may not be available in all jurisdictions and/or to certain types of investors. Issued in the UK by AXA Investment Managers UK Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ. ©AXA Investment Managers 2021.
February 2021 PROFESSIONAL PENSIONS 47
046-047_PP_Feb21.indd 47 27/01/2021 13:10 PP INVESTMENT AWARDS WINNERS
Sustainable Equity Manager of the Year
WINNER INTERVIEW – MARIANNE HARPER GOW
What does it mean to win allows us to analyse companies We’re exploring new this award? on their own merits as we lower-cost active strategies. A great deal. Our firm seeks to seek to identify the material Truly sustainable investing is invest in companies capable of risks and more importantly resource-intensive, requiring long-term sustainable growth. the opportunities for each direct engagement at individual Robust governance, corporate individual company. company level. The resource culture and management required to do this well may sit quality have been core to our What are the key challenges uneasily with the low fees DC research process for over four facing your scheme clients? schemes expect to pay. This has decades. We have developed a In the case of defined benefit led to quantitative approaches team of over 20 governance and schemes, the challenges have that do little to address sustainability analysts to ensure been the same for some time: systemic challenges. social and environmental achieving strong funding We help DC schemes by matters are as deeply integrated positions despite balance offering positive impact and as governance matters. This sheet pressures, prolonged low stewardship-focused strategies award independently confirms interest rates and increasing at reasonable fees, and by our commitment to aspire to longevity. Fewer schemes remain seeking to explain that value being best-in-class. open, and many are closed even for money should incorporate to future accrual. Baillie Gifford effectiveness of engagement What do you believe sets you has helped many such schemes and contribution to progress Marianne Harper Gow is director apart from your peers? achieve improved funding on social and environmental of corporate governance at The idea that a long-term ratios by generating long-term goals, as well as after-fees Baillie Gifford approach to investing embeds investment returns greater than investment performance. the interests of society alongside those of stock markets. Incorporation of governance the interests of investors. Schemes are under increasing and sustainability factors into Companies that abuse the pressure to demonstrate their decision-making can be sources environment, treat staff poorly incorporation of ESG factors. of outperformance, which more or damage the social fabric will We work with clients to meet than compensate for the costs. be regulated out of profitability specific needs via strategies that or deserted by customers. These incorporate Paris alignment, How will you continue to factors are critical to identifying positive engagement and improve your services over exceptional growth companies. impact, and can exclude sectors the coming 12 months? Also, claiming to be long term such as fossil fuels. The reporting we provide while worrying about quarterly For defined contribution around governance and numbers is a contradiction – the (DC) schemes, the primary sustainability will develop and commitments are different; the pressure is the cost constraints improve. In addition to strategy focus is different; the visions and of operating within fee caps. specific reports, we published aspirations are different. This restricts investment our stewardship report SHORTLIST Finally, our dedicated approaches. We don’t condone during 2020. The growing governance and sustainability high fees, but what matters awareness of environmental, l Baillie Gifford analysts are embedded within is investment returns after social and governance related l Janus Henderson all investment teams. Alongside costs. Many DC schemes adopt issues by all schemes creates Investors the portfolio managers, they passive approaches less likely to high expectations. Our l are focused on research, optimise long-term outcomes. focus remains on improving Mirova engagement and voting. We We seek to become available the communication of our l NN Investment Partners have the resources to commit as self-select or alongside engagement activities and l Ownership Capital to those companies of strategic passive funds, within the default achieving positive and l R obeco importance to our clients. This solutions. sustainable outcomes.
48 PROFESSIONAL PENSIONS February 2021
048_PP_Feb21.indd 48 27/01/2021 10:48 Actual investors think in decades. Not quarters.
SEARCH FOR ACTUAL INVESTORS PP INVESTMENT AWARDS WINNERS UK & European Commercial Real Estate Debt Manager of the Year
WINNER INTERVIEW JIM BLAKEMORE
What does it mean to win early, effi cient, and seamless Our experience is demonstrating this award? information on investments. how these objectives – when This prestigious award carries If an investment becomes pursued thoughtfully – can be extra signifi cance for our challenged, we can have mutually reinforcing. fi rm given the extraordinary discussions with the borrower circumstances in which we were sooner and propose rapid How will you continue to all challenged to deliver value solutions, and if needed, work improve your services to for our clients while navigating out any issues with an in-house pension scheme clients over turbulence in the market. investment management team. the coming 12 months? So much of the resilience We expect our products will be we’ve been able to demonstrate What are the key challenges in greater demand as we see the in the past year is a testament facing your pension scheme light at the end of the tunnel. All to the strength of our team clients and how are you the global economies will need and the value we’ve placed on helping them address these time to recover, and certain having well-informed, locally issues? property sectors will need embedded expertise to deliver Clients are very focused on reconfi guration. timely insights that drive sound income in today’s environment. For example, the retail business decision-making. They’re looking for both total and offi ce sectors will need Jim Blakemore is managing This is a celebration of our return and income return so to retool for future needs. partner and head of debt at performance-driven culture and they can maintain liquidity for Other asset classes, such as BentallGreenOak the real estate platform that members’ needs. Some pension student housing and the private we’ve built that is dedicated to schemes are turning to us for rented sector (PRS), will delivering continued growth for the fi rst time because we off er need to address new demand our clients. the income component that is factors. Our lending provides important to them. Between borrowers the debt fi nancing What do you believe sets you Covid and Brexit we’ve seen to reposition buildings, achieve apart from your peers and investors seek safety in debt. the most current safety and contributes to this success? They want a solid return that’s environmental standards, and Our core diff erentiator with insulated from equity risks. better meet the needs of those investors is our track record UK pensions have invested who use them. through the various economic primarily in the UK. But, to Capital in our funds is well cycles, which is driven by three achieve their returns needs, placed to help the recovery contributors. they are increasingly looking for and provide opportunities First, our teams have strength opportunities in Europe and the to pensions. We’re adding in continuity. Second, we’ve U.S. as well. BentallGreenOak resources and have the right on- taken the approach of being the provides a gateway to global the-ground talent to analyse and local lender – we have many markets for investors looking to manage opportunities as our people based on the ground in diversify, because few pension investment portfolio and fund Europe, combined with a strong managers can do a broad off erings have grown. hub in London, allowing us strategy across multiple global Over the next few years we’ll to see more transactions and markets. see signifi cant change as the select the right investments on Pension schemes are also world climbs out of this. With behalf of our pension clients. sharpening their focus on ESG our fl exible capital, experience SHORTLIST And third, we are vertically factors. The objective is to make evaluating properties and our integrated – the investment great investments that provide global knowledge base, we’re ● BentallGreenOak and management functions income and fi nancial protection positioned to provide good ● ICG-Longbow are performed internally. Our to pension scheme members, and safe returns to the pension ● PGIM Real Estate vertical integration gives us and equally address ESG goals. schemes.
50 PROFESSIONAL PENSIONS February 2021
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BENTALLGREENOAK’S GLOBAL REAL ESTATE DEBT PLATFORM COMBINES LENDING EXPERTISE WITH EQUITY INVESTMENT MANAGEMENT EXPERIENCE TO SERVE AS THE FIDUCIARY OF CHOICE FOR PROMINENT INSTITUTIONAL AND PRIVATE WEALTH CLIENTS ACROSS THE GLOBE.
We are proud to be named the UK & European Commercial Real Estate Debt Manager Of The Year for 2020.
Contact us to learn how our real estate debt platform can work for you. www.bentallgreenoak.com
About BentallGreenOak BentallGreenOak is a leading, global real estate investment management advisor and a globally-recognized provider of real estate services. BentallGreenOak serves the interests of more than 750 institutional clients with expertise in the asset management of office, retail, industrial and multi-residential property across the globe. BentallGreenOak has offices in 24 cities across twelve countries with deep, local knowledge, experience, and extensive networks in the regions where we invest and manage real estate assets on behalf of our clients. BentallGreenOak is a part of SLC Management, which is the institutional alternatives and traditional asset management business of Sun Life. PP INVESTMENT AWARDS WINNERS
UK Equity Manager of the Year
WINNER INTERVIEW – ANDREW BROWN
What does it mean to win this What are the key challenges proprietary RI ratings system, award? facing your scheme clients? combining an assessment of We are delighted to have been They are faced with multiple financial stewardship with anal- recognised for our strength in challenges, including enhanced ysis on how a company manages managing UK equity portfolios regulatory and fiduciary duties ESG risks, into a single, forward- on behalf of pension schemes placed on trustees and governing looking rating of between one and retail investors alike. The pension, and the adverse impact and five. Development of this investment team has been at this pandemic has had on tool reflects our conviction that the forefront of UK equity funding levels in the face of a prudent management of finan- investing for a considerable fragile UK economy. cial and RI factors is critical to a time, providing consistently The pandemic represents a company’s sustainability. strong returns for clients. challenging investment outlook Enhancing our intensive for schemes seeking growth internal research, the ratings What do you believe sets you and it has become clear this has provide us with unparalleled apart from your peers? brought the ‘S’ in ESG investing understanding of where RI risks Meeting companies and more to the fore. Our defensive within dynamic real return conducting fundamental positioning in 2020 cushioned investment are concentrated, research lie at the heart of us from the worst bouts of from the bottom-up. Equally our equity approach. We aim market volatility and we remain important was ensuring we can Andrew Brown is institutional to invest in companies that in close contact with compa- effectively communicate the business director at Columbia can create sustainable long- nies, paying particular attention results to our investors, giving Threadneedle Investments term value and believe that by to the safety and wellbeing of them comfort that we are incor- engaging with companies we employees. As we enter 2021 porating ESG analysis at every can gain a thorough under- we have increased exposure to stage of the investment process, standing of their business firms where underlying business not just ticking a regulatory models, company finances, models and growth opportu- box. With this enhanced tool, competitive pressures and nities remain intact and are posi- we continue to be completely drivers of corporate profits. tioned for sustainable success. transparent with our investors’, We analyse companies’ helping them understand the fundamentals from different How will you continue to risks taken with their capital. angles, calculate downside improve your services over Our programme of engaging risks and ignore short-term the coming 12 months? communications over the course noise. We maintain optionality Increased regulatory scrutiny of 2021 will continue to focus by owning companies not has put growing pressure on on investment matters that are necessarily conforming to pension schemes to integrate key to scheme decision makers. widely championed themes responsible investment (RI) Our fund managers are keen to and take sizeable positions, into their investment approach. engage and interact with clients demonstrating our conviction. Welcoming the opportunity to ensure transparency and an Our experience and philos- to help our clients comply, understanding of our approach SHORTLIST ophy of investing through we launched an innovative to managing their assets. market turbulence, ensures we Important information: For use by professional clients and/or equivalent investor types in your l Baillie Gifford are invested in companies with jurisdiction (not to be used with or passed on to retail clients) strong and sustainable business This is an advertising document. Past performance is not a guide to future performance. l BlackR ock Your capital is at risk. The value of investments can fall as well as rise and your clients may models that are going to survive get back less than invested. This material is for information only and does not constitute an l Columbia Threadneedle offer or solicitation of an order to buy or sell any securities or other financial instruments, or to the pandemic and to identify provide investment advice or services. Threadneedle Asset Management Limited, Registered Investments those that should emerge No. 573204, both registered in England and Wales. Cannon Place, 78 Cannon Street London l Liontrust EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct stronger with opportunities to Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and l Lindsell Train gain market share. Threadneedle group of companies. columbiathreadneedle.com
52 PROFESSIONAL PENSIONS February 2021
052_PP_Feb21.indd 52 28/01/2021 17:04 Always investing, always consistent
It’s business as usual for our investment teams globally. Underpinned by our robust processes, the intensity of our research and strength of teamwork we continue to do the best for our clients.
Working together when we are apart has never been more important. Whatever the outlook…Your success is our priority.
columbiathreadneedle.com
Professional Pensions Investment Awards 2020. Important information: For use by Professional and/or Qualified Investors only (not to be used with or passed on to retail clients). Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. Issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com 01.21 | J31236 | 3413099
J31236_Brand Ad Strength_UK_EN_Jan2021_w220xh280.indd 1 22/01/2021 15:51:47 PP INVESTMENT AWARDS WINNERS
Target Date Fund Manager of the Year
WINNER INTERVIEW – DAVID HUTCHINS
What does this award mean the strategy seamlessly with We are working with clients to you? changing market opportunities on a prudent combination In a historically challenging year and member needs, empow- of approaches, including – both for markets and society ering clients to focus on truly designing member engagement – we stepped up our client independent oversight and campaigns that reiterate the communications and support other value-add initiatives. This importance of strong contri- amid significant market turmoil. collaboration allows us to focus butions to overcome lower During 2020 we also executed our research and investment returns; reviewing risk budgets a comprehensive research strategy development on what with a view to maintain agenda, furthered our commit- matters most to clients. existing return targets; and ment to strong governance and maintaining existing budgets/ responsible investing (RI), and What are the key challenges targets, seeking exposure to remained focused on deliv- facing your scheme clients? new return opportunities or ering better member outcomes RI is an increasingly important making changes to improve the through our dynamic approach. topic for our clients. To keep strategy efficiency. After launching our target date them ahead of the curve we fund service 10 years ago, we dedicate significant research How will you continue to are extremely pleased to have time through deep integration improve your services over of ESG considerations. In the coming 12 months? David Hutchins is multi-asset our dedication and hard work solutions portfolio manager at recognised with this award. addition to the negative To elevate client value for AllianceBernstein (exclusions) and positive money we’re focusing our What do you believe sets you (tilts) screens already applied research on identifying and apart from your peers? across the strategy, we are implementing new return Our research-driven approach reviewing the implementation opportunities aimed at boosting is highly flexible, transparent, of smaller allocations from an strategy efficiency. Items for and underpinned by our ESG perspective. To evidence implementation over the next commitment to deep-rooted these actions, and to support 12 months include: a listed client partnerships. clients’ reporting and regulatory allocation to private equity to We develop a true under- requirements, we provide – and serve as a long-term return standing of clients’ individual continue to enhance – detailed enhancer for younger members; needs and objectives, informed ESG reporting. a standalone allocation to by detailed membership analysis Future returns are especially China equities reflecting with our proprietary CyRIL important, after the last decade China’s growing dominance toolset. Combined with the flex- presented a good market in the global economy; and ibility of our open-architecture, environment for most assets – the extension of our risk solutions-oriented approach, particularly for simple, passive management toolset to include we tailor to unique needs or equity and bond exposures. We more defensive tilts and sub- investment beliefs – such as the don’t expect this to continue: asset classes. use of client-specific allocations we forecast lower returns, More broadly, we will or RI policies. We also provide higher volatility, and weaker continue to deepen integra- the option for a fully integrated diversification from govern- tion of our ESG policies, while SHORTLIST post-retirement journey. ment bonds. This will challenge enhancing our ESG reporting. l Providing greater simplicity clients who must meet return We are also developing explicit AllianceBernstein for our clients is at the heart targets within a risk budget – net zero emissions targets as l BlackRock of our service. As a trusted especially for younger members an extension of the currently l Nest partner, we proactively who may not have benefitted applied carbon tilts and l S tate Street Global oversee asset allocation and to the full extent from past monitoring of carbon emission Advisors implementation, evolving performance. metrics.
54 PROFESSIONAL PENSIONS February 2021
054-055_PP_Feb21.indd 54 01/02/2021 15:25 ALLIANCEBERNSTEIN INDUSTRY VOICE
TDFs can crack the value-for-money conundrum
David Hutchins of AllianceBernstein considers the benefits of target date funds
C pensions are under has led many fiduciaries investment portfolios, are well pressure to deliver to question the benefits of ‘Fiduciaries suited to more sophisticated value for money wider diversification. Cheap, investments and more thorough (VFM) and good passive vehicles have delivered must adopt a risk management. However, Dgovernance. But providing value strong net-of-fee returns to forward-looking trustee groups may struggle for diverse client needs requires DC members at relatively low to implement these types a change in mindset from risk. But we believe asset class mindset instead of solutions in a traditional fiduciaries to address evolving dynamics are poised to change, lifestyle approach. investing challenges. which will require a rethink in of relying on past Getting the right mix of Pensions regulators are rightly capturing return sources and investment strategies is pushing for transparency. New managing risk. performance’ essential to achieve VFM. proposals advocate a uniform Focusing just on the lowest framework for analysing VFM INVESTMENT sticker price or strongest recent based on three elements: ENVIRONMENT SET TO low cost equity/bond mixes, a investment performance is charges and transaction costs; CHANGE change in investment regime misleading. In assessing value, customer service; investment In recent decades, simple could weaken the diversifying fiduciaries should consider performance. passive equity/bond portfolios power of bonds and expose the overall costs and benefits enjoyed an exceptionally benign investors in longer-duration associated with an investment WHAT REPRESENTS VALUE, environment. Returns for both assets to higher volatility. solution, as well as the likely AND FOR WHOM? asset classes have been very risk and reward scenarios facing But pension plans have different high and negatively correlated DIVERSIFICATION NEEDED members throughout their members with distinct needs. to an unusual degree. TO MANAGE RISKS career lifetimes. Sponsors have varying levels However, risk/reward profiles Risk management will require Only then can fiduciaries of financial resources and have changed drastically over more extensive diversification determine the features they willingness to finance high time. And today, with both – particularly as government really value andStuart the Hitchcock,best quality pension provision. And equity and bond markets bonds now offer negative yields, approach for members.head of portfolio TDFs management, fiduciaries who seek high- relatively expensive, the risk/ net of fees. More advanced can help fiduciaries solve the private credit quality investment solutions return trade-off may deteriorate. DC solutions are needed to VFM conundrum by combining with good governance and As a result, we believe additional harness the diversifying power high quality, well-diversified customisation capabilities will diversifying strategies will be of a wider variety of market investment strategies with perceive value differently than needed to manage risks and opportunities, in our view. transparent reporting,Amie Stow, superior those seeking a basic, low-cost enhance returns in the post That’s not easy for traditional governance andsenior improved investment packaged solution. VFM must be Covid-19 era. lifestyle approaches. Even member engagement.specialist, private interpreted relative to a pension For 40 years, simple 60/40 larger, well-resourced pension credit plan’s positioning and goals. equity/bond portfolios outpaced plans may struggle to manage The value of an investment can go To do so, fiduciaries must inflation. But future returns the type of strategies that down as well as up and investors adopt a forward-looking from a typical 60/40 portfolio can deliver amid higher may not get backSamuel the full Jones, amount mindset instead of relying on are likely to decline, while volatility and lower returns for they invested. Pastportfolio performance manager, past performance. Analysing the policy response to the traditional asset classes. does not guaranteeprivate future credit results how investment strategies pandemic could fuel inflation. fit a DC pension plan default Our forecasts suggest an TDFS ARE SUITED involves considering future annualised return of just 3.4% FOR THE JOB David Hutchins performance and risk scenarios over a 10-year horizon – which These strategies could include Multi-asset and understanding how their may struggle to stay ahead of illiquid investments in private solutions portfolio default choice may affect inflation at potentially more market debt and private equity manager, members’ savings through their than 3% p.a. as well as direct physical AllianceBernstein remaining career lifetimes. The risk outlook also investment in real estate and Strong performance by deserves attention. Historically, infrastructure. Target date global equity and bond stocks and bonds weren’t funds (TDFs), with full-time markets in recent years always inversely correlated. In professional oversight of
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