National Employment Savings Trust, London, is searching for a manager to run an active commodities fund, the defined contribution plan said in a news release Wednesday.
Commodities will be added to NEST's retirement-date funds and some alternative fund choices, NEST said. The £1.8 billion ($2.5 billion) national workplace defined contribution plan is interested in a blended fund that includes commodity-related equities and will consider seeding a new pooled fund. "We plan an initial allocation of 5% of funds under management but this may grow over time," a spokeswoman said in an email.
"As our assets under management grow, we're able to explore new ways to diversify members' pots and give them access to different opportunities. We expect the return on our commodities investment to have a moderate correlation with equity and fixed-income markets and we also think that it will provide some inflation protection," said John St. Hill, deputy CIO, in the release.
"Commodities look attractive relative to their long-term historic prices. As the world's population grows and incomes in the developing world rise, we expect increasing demand for commodities. We want our members to benefit from these long-term trends," Mr. St. Hill added.
The selected manager will be expected to manage the risks of commodities markets, including environmental, social and governance risks, NEST said.
Proposals are due on Feb. 26. NEST plans to make a decision by the spring of 2018 with the contract taking effect in early summer, the spokeswoman said. The search notice is available on a U.K. government procurement website.