China’s state social security fund has chosen a batch of foreign asset managers to run the global mandates for which it invited pitches a year ago. They cover emerging-market bonds, multi-asset allocation, global resources active equity and global real-estate active equity.
The National Council for Social Security Fund (NCSSF) said this week that it has signed investment-management agreements with 12 foreign fund houses for its global portfolios. It does not specify the size of the mandates, but Shanghai consultancy Z-Ben Advisors last year estimated they will amount to $6 billion.
JP Morgan, Lombard Odier, Neuberger Berman and Schroders will run the multi-asset allocation mandates, including bank deposits, treasuries, offshore renminbi bonds, money-market instruments, equities, fund products and derivatives.
Standish and Stone Harbor Investment Partners will manage emerging-market bond portfolios by investing in investment-grade EM local-currency bonds, benchmarked against the JP Morgan Emerging Market Bond Index Global Diversified.
For global resources active equity, NCSSF chose AGF, Investec, JP Morgan and RBC GAM. They are tasked with beating a benchmark comprising the MSCI World Energy Index (50%) and the MSCI World Metals and Mining index (50%). The managers are allowed to go beyond the scope of these indices to invest in raw materials, agriculture and utilities stocks.
AEW, AMP Capital and European Investors Inc have been chosen to manage NCSSF's global real estate active equity investments. They are expected to invest mostly in property-related stocks covered by the FTSE Epra/Nareit Developed Index.
Anthony Fasso, CEO of AMP Capital's international business, says: “This mandate is a major milestone for AMP Capital in China and the region, given the significance of NCSSF. It highlights the growing trend of Chinese offshore investing."
The NCSSF portfolio run by AMP Capital will include property securities listed in the Americas, Europe and Asia-Pacific, managed by the firm's head of global listed real estate, Matthew Hoult, and his team located across Sydney, Hong Kong, London and Chicago.
The NCSSF has invested overseas since 2006 and plans to increase its offshore allocation to 20% of its portfolio. At the end of 2011, the fund's total AUM stood at Rmb868.82 billion ($136.4 billion), of which Rmb504.11 billion (58.02%) is managed internally and Rmb364.71 billion (41.98%) by external managers.
The fund also plans to boost investment by up to Rmb250 billion in Chinese state-owned enterprises and private-equity funds over the next three years.