Wells Fargo Asset Management (WFAM) is stepping up its activities in the UK DC market and has today been appointed manage a segregated, global corporate bond mandate for Nest.
WFAM won a competitive tender from almost 50 asset managers to run an active, segregated account with a currency hedge.
The fund will be evergreen and able to scale up to meet the demands of the rapidly growing pension scheme which takes around £400 million a month in member contributions.
WFAM will immediately start to invest on behalf of Nest and its 8 million members, with the pension scheme aiming to invest around £500m into global bonds over the course of the next 12 months.
Nest has been investing in the UK corporate bond market for a number of years but is looking to expand out further as it sees favourable and stable returns offered globally in this asset class.
Nest head of public markets Anders Lundgren says: “This step is a natural progression for a scheme of Nest’s size and helps us to further develop our sophisticated investment strategy.
“The UK bond market has been a successful performer in our funds over the past few years. We’ve looked ahead and seen that there are further opportunities globally in this market, which is why we’re making this move.
“WFAM has managed credit for over 25 years, which means they have gone through multiple credit cycles – experience that’s hard to replicate. They have a dedicated ESG strategy team to ensure we can continue to generate sustained, long-term returns for our members.
“A segregated mandate gives us greater control over how our member’s money is invested, ensuring we adhere to our strong ESG criteria.”
WFAM says it is committing new dedicated resources to the UK DC market.
Wells Fargo Asset Management CEO Nico Marais says: “We are honoured that Nest has selected Wells Fargo Asset Management to manage its new global investment grade credit mandate.
“Our investment and research specialists look forward to harnessing the firm’s investment acumen, expertise on risk management, and integrated environmental, social and governance platform to help Nest and its members achieve their investment objectives.”