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Nest begins emerging market fund search

Nest has issued a tender for two emerging market investment funds as the Government-backed scheme looks to boost members’ pension pots.

Nest is looking to procure a global emerging market equity index-tracking fund and an alternative index global emerging market fund.

Nest says the two funds will be used as “building blocks” for the scheme’s default retirement date funds.

Nest chief investment officer Mark Fawcett says: “We are continuing to refine our already sophisticated investment approach. These emerging markets mandates will allow us to further access an asset class with the potential to deliver good growth for our members as well as greater scope for diversification.”

Nest has handed out seven investment mandates since February 2011.

These include a Passive Global Equities fund, run by UBS Global Asset Management; a Passive UK Gilt fund and Passive UK Index Linked Gilt fund, both run by State Street Global Advisors; a Sterling Cash fund and Diversified Beta fund, both run by Blackrock; the equity portion of the Nest Ethical fund, run by F&C Global Asset Management; and a Sharia fund, run by HSBC Global Asset Management.

Hargreaves Lansdown head of corporate research Laith Khalaf says: “I am surprised Nest is moving into emerging markets because their strategy has been very cautious so far.

“But it is a good thing Nest is looking for emerging market exposure and it should mean younger investors who can ride out volatility will have the opportunity of achieving better returns.”

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