date devon pension fund member engagement day 2020...13. how we look at managers clear...

Devon Pension Fund

Member Engagement Day 2020Mark Mansley

Chief Investment Officer, Brunel Pension Partnership

DATE

Forging better futures

Classification: ConfidentialAuthorised and regulated by the

Financial Conduct Authority No. 790168

Agenda


Classification: Confidential2

• Investment framework

• Brunel Portfolios

• Overview

• Construction

• Responsible Investment

INVESTMENT FRAMEWORK



Investment Principles

Long-term ResponsibleStrong

governance

Working with

othersTransparent &

accountableCost-effective

Active

stewardship

Full risk

evaluationRight risk for

right return

Evidence &

research

Leadership &

innovationExpertise


Classification: Confidential 4

Key building blocks

Committed teamBelieving in the partnership

Client assurance framework

Building trust collaboratively

Detailed analysisManager selection

Portfolio construction



Long-term themes

Technological change

Deep disruption

Inequality and political unrest

Rethinking capitalism

Rise of China

Indices

Climate Change

Energy transition

Adaptation



Asset Allocation

Consider a reasonable

allocation to growth assetsMitigate risk: low volatility/quality

Seek diversificationIlliquidity

Manager alpha

Targeted risks

Bonds /low risk assets:

Allocate based on risk tolerance



Brunel Portfolios



• ~24 key building blocks

– Defined in collectively agreed specifications

• Range defined by the whole partnership

➔ specificity– Scale efficiencies

– All distinct

– Outcome based

• Not fixed: CAD policy

– Meet asset allocation needs

– Restraint: Resources & efficiency

Brunel Portfolios

Private Debt^ InfrastructureSustainable

Global^Private Equity

Global bonds* UK propertyInternational

propertyGlobal core* Small cap^

£ Corp bonds*Secured Income

Low volatilityLow carbon

passiveDeveloped high alpha

Passive IL gilts^Multi asset

credit*Smart beta

passivePassive global

Emerging markets

(LDI+) DGF^ Hedge funds* Passive UK UK equities

Defensive Diversifying/Risk Efficient Growth



All portfolios actively managed unless otherwise indicatedPortfolios live unless indicated ^ in progress, launch H1 2020, * yet tocommence LDI+ is not a formal portfolio. Leveraged gilts and passive EM equities not listed.

Responsible Investment / Climate risk



• Responsible investment covers all portfolio

• But asset allocation has a key impact

Good for Responsible Investment Challenging for Responsible Investment

• Sustainable Global EquitiesA strategic view of sustainability, investing

in positive companies providing solutions

• Passive Low Carbon EquitiesLow cost and focused on climate risk

The private market portfolios deeply

embed sustainability with clear ESG

controls

• Infrastructure

- renewable energy option

• Private Equity• Secured Income

• Passive UK EquitiesHigh resources sector exposure, with material carbon emissions. Good stewardship potential.

• Emerging marketssignificant carbon emissions and often practical governance issues (particular passive).

• Active UK equitiesas above, but with greater ability to manage some of challenges.

Our Team



8 x Chartered Financial Analyst® designation (CFA®)

2 x Chartered Fellow CISI (Chartered FCSI)

1 x Chartered Alternative Investment Analyst (CAIA)

3 x Certificate in ESG Investing (CFA ESG)

1 x Certificate in Investment Performance Measurement (CIPM)

>10 x Investment Management Certificate (IMC)

Our Experience



32,000+ tender pages assessed

Market research

Investment

due

diligence

Invitations to tender

Engagement with

130+ investment managers

8 portfolios

17 strategies

£12.1Bn transitioned

Portfolio

construction

Managers

selected

530+ investment strategies reviewed



How we look at managers

Clear understandable process which is

evidence based

High conviction or quantitative approaches

Integrate similar values and considerations

into the investment strategy

We test they are doing what they say they

do

Complementary and differentiated return

profiles



How we do it…

450

400

350

300

250

200

150

100

50

0

tCO

2e

/£m

Global High Alpha – Manager proposedportfolios



How we do it…

One company is driving

70% of portfolio carbon emissions



Transition Pathway Initiative (TPI)

Analysis



How we do it…

Global High Alpha – Final Portfolio



120

100

80

60

40

20

0

Benchmark GHA Portfolio

tCO

2e

/£m

Responsible Investment

DATE


Classification: ConfidentialAuthorised and regulated by the

Financial Conduct Authority No. 790168

What is Responsible Investment?



Aim of Brunel’s RI Strategy



To deliver stronger investment

returns over the long term,

protecting our Clients’ interests

through contributing to a more

sustainable and resilient financial

system, which supports

sustainable economic growth

and a thriving society.

Climate Change

Investing to deliver a below

2C° world - is the right

answer



Challenging the industry on

how they are taking action

today - is the right question

Priorities

UK policy framework

Climate change

Cost and tax transparency

Human capital & diversity

Cyber securitySupply chain

management




Tip of the iceberg

© Copyright Showeet.com

RI & Stewardship updates


Voting records

Portfolio

dashboards

Advocacy

BOB & Client Group Updates RI Subgroup

X-Pool RI

Market

research

Daily alerts (data & news

providers)

Portfolio Monitoring(daily/ monthly/ quarterly)

Manager

selection & monitoring

Industry working

groups

Product

governance

RI Policies

Annual reports

Academic

research

Public policy support

Peer to peer support

Brunel Governance

& decision making

Best practice in our

own operations

Confidential

engagement

Product innovation

TrainingStakeholder

communication

Time for your questions

Thank you for your time and attention.Any questions?


Classification: Confidential

26

Important Information



7

• This content is produced by Brunel Pension Partnership Limited. It is for

the exclusive use of our Clients and is neither directed to, nor

intended for distribution or use by, any person or entity who is a

citizen or resident of or located in any locality, state, country or

jurisdiction where distribution, publication, availability or use of this

document would be contrary to law or regulation.

This content is provided for information purposes only and does not

constitute an offer or a recommendation to buy or sell securities or

financial instruments. It is not intended to be a substitute for the full

documentation of the portfolios. Past performance is not a guide to

future performance.

• Authorised and regulated by the Financial Conduct Authority No.

790168

• Updated November 2019


Classification: Confidential

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