AP1, Stockholm, is searching for managers to run its global high-yield allocation, said Tina Ronnholm, analyst, external management, at the pension fund.
The 298 billion Swedish kronor ($32.4 billion) pension fund has about a 4% allocation to high yield.
“As a part of our investment process, we re-tender all external mandates at regular intervals,” said Ms. Ronnholm in an e-mail. Executives want to broaden the universe of its exposure to global high yield, from its current U.S.-only allocation, she said. “Our existing managers are thus challenged, but are welcome to submit an application and participate in this new tender.” Incumbent managers could not be learned by press time.
AP1 executives will pay special attention to how money managers consider and integrate environmental, social and governance factors in their investment process. Ms. Ronnholm said executives have not yet decided on the number of contracts to award. “Our aim is to build a diversified profile of high-yield managers of high quality, which as a combination fulfills our risk and return expectations in a cost-efficient manner, taking our sustainability vision and strategy into consideration,” she said.
A financial update for AP1 covering the six months ended June 30 said high-yield investments totaled 10.9 billion Swedish kronor, equal to 3.7% of net assets, as of June 30. Investments are made in non-investment-grade, high-yield bonds, and the portfolio produced a 4.2% return in the first six months of 2016.
Proposals are due Jan. 31, and applicants must register to access the RFP. Executives expect to make a decision in the first half of the year.
Further details are available on AP1's website.