£45bn council pension pool hires bond giant PIMCO

The Leeds-based £45 billion Border to Coast Pensions Partnership said on Wednesday it appointed US bond fund giant PIMCO as the core manager for its multi-asset credit (MAC) fund which is expected to be launched in early 2021.

Border to Coast is one of the largest public sector pension pools in the UK and involves 12 local government pension scheme funds from Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, Northumberland, North Yorkshire, South Yorkshire, Surrey, Teesside, Tyne & Wear and Warwickshire.

“The (multi-asset credit) fund will sit within Border to Coast’s fixed income fund range and will offer its partner funds access to higher-yielding areas of public fixed income markets,” said Border to Coast.

“The MAC strategy will target cash plus 3% to 4% pa through a diversified portfolio of high yield bonds, leveraged loans, emerging market debt, securitised credit and other fixed income assets.

“The fund will be constructed with a core-satellite structure consisting of a core MAC manager, PIMCO, and a series of complementary single asset class specialists.”

Border to Coast chief investment officer Daniel Booth said: “Establishing a multi asset credit fund is an essential part of Border to Coast’s objective in delivering long-term risk-adjusted investment returns for our twelve partner funds.

“PIMCO has a long and established track record of multi-asset credit investing and will play a key role as a strategic partner to Border to Coast in the set-up and on-going management of our multi-asset credit fund.”

PIMCO MD Ryan Blute said: “We are honoured to have been selected to partner with Border to Coast Pension Partnership as the core multi asset credit manager.

“We look forward to sharing our extensive resources and experience across global fixed income markets as we work towards our mutual goal of achieving strong risk-adjusted investment returns and meeting the needs of the underlying partner funds.”

Border to Coast said it is now seeking applications from investment managers for four individual asset class mandates.

These will cover high yield bonds, leveraged loans, emerging market debt and securitised credit.

The mandate sizes are expected to range from £250 million to £500 million.

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