Dive Brief:
- The United Kingdom’s The People’s Pension, managed by one of the U.K.’s largest independent trusts, announced Thursday that it had appointed European firm Amundi and U.S. firm Invesco to manage 28 billion pounds ($35.3 billion) in assets, of its more than 32 billion pound ($40.3 billion) portfolio.
- Previously, State Street — the third largest asset management firm in the United States — managed the pension fund’s entire portfolio, but will retain management of nearly 5 billion pounds ($6.3 billion), People’s Pension told ESG Dive Friday.
- The People’s Pension Chair of Trustees Mark Condron said the selections of Amundi and Invesco to take over the bulk of its portfolio highlights “The People’s Pension’s broader mission to balance strong financial performance with responsible investment principles.”
Dive Insight:
The People’s Pension updated its responsible investment policy last spring, and it highlighted Amundi’s performance against that policy framework and Invesco’s approach to net-zero alignment and ESG analysis as reasons the managers were chosen. Amundi “showed strength” across all categories of an analysis of asset managers’ portfolio construction; people and teams; risk management and systems; firmwide considerations; responsible investment; and partnership capabilities, according to the announcement.
Under the appointment, Amundi — the largest asset manager in Europe by assets under management — will manage the bulk of The People’s Pension portfolio (20 billion pounds or $25.2 billion) in a passive equity portfolio. Invesco will manage 8 billion pounds (over $10 billion) in fixed income investments, and The People’s pension said the firm’s approach will also include “active engagement with issuers to promote sustainable business practices.”
“By selecting Amundi and Invesco, we have chosen to prioritize sustainability, active stewardship, and long-term value creation for our nearly seven million members,” Condron said in the Feb. 27 release.
The pair of asset managers were selected by the equity and fixed income team from People’s Partnership, the independent master trust that oversees the fund. People’s Partnership Chief Investment Officer Dan Mikulskis said in Thursday’s release that the appointments signal “a major evolution for The People’s Pension.”
“As one of the fastest growing asset owners in the U.K., we have a responsibility to deliver strong, sustainable returns for our members and a best-in-class investment strategy,” Mikulskis said. “Both managers bring exceptional expertise and share our commitment to responsible investment, which is central to our approach.”
The pension fund approaches responsible investment by looking to “add financial value and resilience” through portfolio construction and stewardship, while also looking to “encourage companies to behave in a more sustainable way” as a complementary goal, according to the updated policy. The fund’s trustees look to encourage sustainable corporate behavior by “prioritizing ESG risks and opportunities where the investment case for financial materiality over the medium to long term is strongest,” as well as identifying ESG issues and making limited use of exclusions.
“The Trustee has concluded that its fiduciary duty is to address these issues as part of its investment decision making,” the April 2024 policy update said.
The move to have the fund managed by multiple firms rather than relying on State Street alone, follows a shift in how The People’s Pension has apportioned its investment mandates. The fund moved the 28 billion pounds of assets announced Thursday into segregated mandates in a “recent transition,” according to the release.
State Street’s decreased role in managing The People’s Pension’s funds comes following a 2024 proxy season where the asset manager supported just 6% of environmental shareholder proposals and 7% of social proposals — which also showed falling support from BlackRock and Vanguard, with the latter supporting no such proposals. State Street’s engagement with companies on social issues also fell more than 48% year-over-year, the firm reported last fall.
A spokesperson for State Street’s European, Middle East and Africa portfolio said in an emailed statement to ESG Dive Thursday that the firm “look[s] forward to continuing our work with The People’s Pension on the remaining mandates.”
