NEST (National Employment Savings Trust) has awarded Legal & General Investment Management (LGIM) two real estate mandates, representing its first direct investment into commercial property as part of its award winning investment strategy.
The new mandates allow NEST to further refine its sophisticated investment approach, providing enhanced access to an asset class capable of delivering long-term and sustainable growth for NEST scheme members.
NEST’s innovative target date fund structure and expected scale ensure that it can incorporate these mandates as part of a diversified and actively risk-managed approach, whilst maintaining its very low member charge. The combination of UK direct and global indirect funds provides greater diversification and liquidity, while reducing fund expenses and the entry and exit costs typically associated with direct property investment.
NEST led a highly competitive procurement process in order to select LGIM and its property platform, Legal & General Property (LGP), as the manager for its two real estate mandates. These new building blocks will make up a sizeable portion of the NEST Retirement Date Funds, as well as the NEST Higher Risk Fund and NEST Ethical Fund options.
Announcing the appointment, Mark Fawcett, chief investment officer at NEST, said: ‘We’re always searching for cost-efficient opportunities to access rewarded risk for our members. These new mandates, along with other building blocks we add in the future, continue to allow us to develop our award winning strategy.
‘Legal & General was chosen because it delivers on our demanding requirements for excellence in investment processes and philosophy, high quality risk management and a comprehensive integration of environmental, social and governance (ESG) factors. These elements give us confidence that we will continue to deliver strong and sustainable performance for NEST members.’
Bill Hughes, Managing Director of Legal & General Property, commented:
‘NEST is an industry-leading platform and likely to be one of the most significant participants in the UK pensions industry over the next decade, therefore we see this strategic decision to include direct property within its key building blocks as a major step forward for commercial real estate within the new world of DC pensions and a significant endorsement of our funds.
‘Offering an innovative and bespoke solution for DC schemes, our fund enables this growing market to gain access to property market returns, whilst also providing enhanced diversification and liquidity.’
NEST is working with more than 400 large employers for automatic enrolment and currently has over 250,000 members.
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