Nest has appointed Royal London Asset Management to provide an actively managed sterling corporate bond mandate.
Nest says the mandate will be one of the “underlying building blocks” for the scheme’s retirement date funds and pre-retirement fund. It will not be offered to members as a standalone fund choice. The retirement date funds invest members’ savings based on their state pension age.
The pre-retirement fund is designed for people who start saving with Nest within a few years of their retirement date and invests in UK government bonds, corporate bonds and low-risk money market investments.
Nest chief investment officer Mark Fawcett says: “This additional building block allows us to further refine the already sophisticated approach we use to manage risk and deliver our investment objectives.”
RLAM chief executive officer Robert Talbut says: “Our experience and investment approach has enabled us to consistently add value for a range of clients through active management and we look forward to working with Nest for the benefit of investors in the Nest retirement funds.”
Nest’s default investment strategy has been questioned by many in the industry because the early stages of membership are exposed to lower risk than the growth phase in the middle of people’s careers.
Nest says the decision was taken to avoid high volumes of opt-outs and to build public confidence in the scheme.
Hargreaves Lansdown pension investment manager Laith Khalaf says: “RLAM has a strong fixed-interest team and it does make sense for Nest to have active management, provided it is offered at a low cost.”