By Summer Zhen
HONG KONG (Reuters) – Border to Coast Pensions Partnership, one of the UK’s largest pension pools, has appointed two specialist China equity managers to run a third of the capital in its new emerging markets fund.
The pension pool has selected four specialist managers for a new £700 million ($840.42 million) Emerging Markets Equity Alpha Fund, due to be launched soon. About one third of the fund, or about £230 million, will be allocated to a “dedicated China equity sleeve”, Border to Coast said in a statement last week.
UBS Asset Management and Hong Kong-based FountainCap Research & Investment won the China mandates, while Goldman Sachs Asset Management and Baillie Gifford have been chosen to manage an “Emerging Markets ex-China equity sleeve” accounting for around two-thirds of the fund.
Border to Coast tapped UBS and FountainCap to manage a £300-500 million China sleeve in a restructuring of an existing £900 million emerging markets equity fund in 2020, when MSCI China outperformed the rest of the world.
But this new China mandate comes at a time when global fund managers are reassessing or trimming their positions in China, amid uncertainties around the direction of the economy under President Xi Jinping’s third term, tensions with the United States and Taiwan and Beijing’s regulatory drive.
Yet Border to Coast said China is hard to ignore.
“China makes up around one third of the emerging markets benchmark and our fund provides Partner Funds with access to this large market,” Border to Coast said in a reply to Reuters.
“By allocating between China and ex-China we will have discretion to manage both future risks and opportunities in China,” the pension pool manager also said, referring to the potential China related risks.
Established in 2018, Border to Coast managed £60 billion of assets as of 31 March 2022.
($1 = 0.8329 pounds)
(Reporting by Summer Zhen; Editing by Vidya Ranganathan and Christina Fincher)