U.K. defined contribution multiemployer plan Cushon Master Trust selected four managers to run its new default fund, including Schroders Capital to manage a new 15% allocation to private markets with an ESG focus, a spokeswoman confirmed Monday.
The £740 million ($1 billion) plan will invest in wind and solar farms, forestry, battery technology, green hydrogen fuel and social housing in developed and emerging markets.
The new investment in private markets will result in Cushon switching to a new default fund, which in addition to alternatives will feature a 75% allocation to equity and a 10% allocation to corporate bonds.
Lombard Odier Investment Managers and Wellington Management were hired to manage bonds and social bonds, respectively. Macquarie Asset Management was selected to manage listed equities. All appointments are new hires.
Cushon's previous default fund, which had a 45% allocation to global equities, 35% allocation to U.K. equities, and 16% allocation to U.K. gilts and a 4% allocation to other bonds was managed by BlackRock.
Starting in early 2022, Cushon's new private markets strategy will be focused on green companies, environmental projects such as the planting of new sustainable forests and financing new wind and solar farms.
The strategy aims to invest in alignment with the United Nations' Sustainable Development Goals to, for example, improve access to telecommunications, education, medicines and agricultural technology in low-income countries.
"The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment which we believe supports better long-term financial outcomes for our members," Roger Mattingly, chairman of the Cushon Master Trust, said in a news release.
The master trust executives negotiated fees with its manager to ensure that the new investments will be confined within the 0.75% charge cap on assets under management and administration, Mr. Mattingly added.
"We have spent considerable time undertaking due diligence of the investments and fund managers, as well as negotiating costs to ensure that we can include private market investments well within the confines of the charge cap," Mr. Mattingly said.
Julius Pursaill, strategic adviser at Cushon, added in the release: "Private markets increasingly offer sources of return that listed markets don't."
"Forestry and microfinance, for example, as well as private equity — these give members access to better diversification, higher expected returns and ultimately significantly improved investment outcomes," he said.
