New Equity Mandates Hint at ESG Rethink

    Stockholm (NordSIP) – The trend towards Article 8 becoming the new minimum standard for Nordic investors is borne out by three new active equity mandates that have just been published on the Global Fund Search (GFS) platform.

    The unnamed Nordic institutional investor is looking to allocate three amounts of EUR 30-40 million to managers in European, US and global emerging markets (GEM) equities.  Hard requirements include UCITS funds with either institutional share class or X-share class (i.e. invoicing of management fee), some minimum fund size criteria and the exclusion of leverage and pure quant approaches.  Beyond that the investor seems quite open-minded.

    Common to the three mandates is a desire for managers with a fundamental, bottom-up process with no constant bias to any particular style.  Managers are given quite a lot of scope to be creative in how they achieve the desired 300bps of outperformance.  Up to 30% off-benchmark holdings are allowed, as well as opportunistic shifts into small cap of up to 20%.  The maximum tracking error of 7 is also seen as a guideline rather than a strict cap.

    In terms of sustainability requirements, the investor expects to see a comprehensive ESG process in place that focuses on identifying portfolio companies’ pathways towards sustainability rather than simply overweighting higher ESG rated stocks.  There is a preference for funds with Sustainable Finance Disclosures Regulation (SFDR) Article 8 category reporting standards.

    Managers interested in applying for one or more of these mandates should head to the GFS platform for full details and instructions.  The RFP responses must be submitted to GFS by September 5, 2022.

    Image courtesy of Ruben Rubio from Pixabay (edited)
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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