Railpen, London, hired Neuberger Berman to manage a £2 billion ($2.6 billion) liquid multiasset credit allocation within its own multiasset portfolio.
The allocation establishes a strategic partnership between Railpen, the in-house manager of the £34 billion Railways Pension Scheme, London, and Neuberger Berman, Railpen said in a news release. Investments span investment-grade and non-investment-grade bonds.
The strategy will sit within Railpen's growth fund — a multiasset portfolio managed by Craig Heron, head of public markets at Railpen. The strategy was designed to help the pension plan to deliver on the growth fund's risk and return objectives, the news release said. Neuberger Berman's credit team will manage the allocation.
Railpen uses both internal and external managers, although the majority of assets are now run in-house. However, it was decided the multiasset credit asset class "is more resource-intensive and requires a specific set of skills, scale and capabilities and warranted engagement with external managers," Mr. Heron said in an email.
The segregated allocation, which has been designed specifically for Railpen following dialogue with Neuberger Berman, was funded by reallocating some of the growth fund's listed equity assets and cash, he said.
"We decided, as a result of market repricing, to allocate more of the growth fund to credit in order to improve the risk and return profile of our fund," Mr. Heron said.
A search process launched in the third quarter of 2022.
"The firm's expertise in credit investing, combined with strong ESG capabilities, makes Neuberger Berman an ideal partner for us as we continue to secure our members' future," said Harsha Patel of the external manager oversight team at Railpen, in the release.
Abigail Parrott contributed to this story.