Brunel Picks Two Managers to Run Low-Volatility Portfolio

Low-risk global stock portfolio expected to grow by £200 million for UK pension fund.

Britain’s Brunel Pension Partnership has completed one of its manager searches.

German asset manager Quoniam and Robeco, a Dutch manager, will handle the £30 billion ($34 billion) local government pension pool’s Low Volatility Global Equities portfolio. The fund is starting with £400 million, but Brunel expects it to grow to £600 million.

The portfolio wants to invest in long-only stocks that aren’t as prone to rapid price fluctuations, essentially creating a low-risk environment, according to Mark Mansley, Brunel’s chief investment officer. “We aim to achieve long-term returns through exposure to the low-volatility factor and our managers’ skill,” he told CIO.

Quoniam and Robeco will divide their responsibilities evenly. Mansley said the organization was impressed by the “clarity” of the managers’ investment processes and the three firms’ aligned values.

“For this search, two particular areas we were interested in were understanding how managers address risk of valuation bubbles in low-volatility strategies, and their use of ESG considerations to help further reduce risk,” said Mansley, who added that the organization received 50 inquiries for the selection, many of them “high-quality” candidates.

The search took a few months to complete.

After a brief pre-registration period, Brunel officially launched an active manager search for its “flagship” $2.6 billion global high alpha fund earlier this month. The inquiry ends on April 3.

The firm also selected FundRock Management to run its fund structure last June. Once it meets regulatory and risk management requirements, Brunel tackles the investment management, with direct decisions then falling on its managers.

Brunel is one of the UK’s eight local government pension plans. It combines the retirement assets of 10 funds (Avon, Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset, and Wiltshire).

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