UK master trust Now:Pensions, which manages some £4bn in assets, has parted ways with most of its third-party managers and handed over the management of these assets to its investment manager, Cardano, as Net Zero Investor can reveal.
Now:Pensions, which manages the assets of some 2 million members, has ceased its investments with most of its third-party managers, bringing the portfolio directly under the management of parent group Cardano, the fund’s recently appointed head of sustainability, Keith Guthrie, told Net Zero Investor. An exception to that is the Sharia compliant tranche of its fund range, where it remains invested with HSBC Asset Management.
The change was introduced in large part to achieve greater consistency in stewardship, he explained. "When Cardano allocated to third-party managers, each manager had a slightly different approach to engagement. For example, how they engaged with and voted on companies with fossil fuel exposure," he said.
By taking the management of assets in-house, the fund is now able to better meet its members' needs as well as having a greater impact on stewardship principles, Guthrie explained.
Now:Pensions is in a relatively better position than other master trusts to make these changes due to having been acquired by Cardano Group in 2019. As of 2023, Cardano had more than £52bn in assets under management and acts as the investment manager for the master trust.
The changes apply to some 30% of Now:Pension's £4bn portfolio, Guthrie said. This would imply that some £1.2bn had effectively been divested.
While Guthrie, who joined the master trust in November last year, chose not to disclose the names of the managers in question, the fund’s 2023 Responsible Investment Implementation Statement listed BlackRock and Legal and General Investment Management as third-party managers.
The statement also said that the trustee expected managers to be signatories of the UK Stewardship Code and for managers to exercise voting rights in line with the trustees’ responsible investment principles. Both BlackRock and LGIM are signatories of the code.
Now:Pension’s move comes as asset owners are increasingly expressing their frustration about stewardship misalignment with major asset managers. This was the subject of a 2023 research initiative by the UK Asset Owner Roundtable.
Earlier this week, another major UK master trust, the People’s Partnership, had threatened to part ways with managers whose stewardship practice was not consistent with the master trust’s principles.
The full interview with Keith Guthrie on the master trust's new approach to stewardship can be found below.
Now:Pension's Keith Guthrie on ditching third party managers and new stewardship strategies
DC master trust warns it will ditch managers who underperform on stewardship
