National Employment Savings Trust, London, has updated its investment principles, emphasizing its commitment to long-term value, passive investment vehicles and internal oversight for its roughly £180 million ($303.4 million) of assets.
Following a review of the past three years, executives at the multiemployer defined contribution plan have updated the framework for its approach to managing participants’ money.
Changes include adding two beliefs to its framework and revising another.
The first new belief highlights NEST’s commitment to basing investment decisions on longer-term valuation considerations, meaning investment executives will actively opt to divest asset classes that it considers overpriced. It will instead look to invest in “relatively underpriced or fairly priced assets … that are likely to increase in future value,” executives wrote in the updated statement.
As part of that, NEST executives also have updated the existing belief statement about passive management, recognizing growing evidence that alternative indexing can be a good way to capture opportunities while keeping costs down.
“We’re active in our approach to asset allocation, but where possible we’ll use index funds,” said Mark Fawcett, chief investment officer at the plan, in a news release accompanying the updated statement of investment principles.
The second new belief relates to NEST’s view that key strategic decisions of asset and risk allocation should be “taken by an appropriately resourced and professional in-house team,” it wrote. Beyond portfolio construction, in-house executives should take an active role in the procurement, governance and oversight of the money managers the plan hires, as well as to the plan’s responsible ownership approach.
Relating to that, NEST also strengthened its belief in the value of incorporating environmental, social and governance risk factors into its investment management process.