UK's Largest Pension Fund Appoints Two China Specialists to Manage Funds worth USD 840M

Border to Coast Pensions Partnership, one of the UK's largest pension funds, has appointed two China equity specialists to manage a third of the capital in its new emerging markets fund.

The pension fund has chosen four specialist managers for a new £700 million ($840.42 million) Emerging Markets Equity Alpha Fund, which is set to launch soon. A third of the fund, or approximately £230 million, will be allocated to a "dedicated China equity sleeve," according to a statement released last week by Border to Coast.

The China mandates were won by UBS Asset Management and Hong Kong-based FountainCap Research & Investment, while Goldman Sachs Asset Management and Baillie Gifford were chosen to manage a "Emerging Markets ex-China equity sleeve" accounting for roughly two-thirds of the fund.

Border to Coast hired UBS and FountainCap to manage a £300-500 million China sleeve as part of a restructure of an existing £900 million emerging markets equity fund in 2020, when MSCI China outperformed the rest of the world.

However, this new China mandate comes at a time when global fund managers are reassessing or reducing their positions in China due to uncertainty about the economy's direction under President Xi Jinping's third term, tensions with the US and Taiwan, and Beijing's regulatory push.

Nonetheless, according to Border to Coast, China is difficult to ignore.

"China accounts for roughly one-third of the emerging markets benchmark, and our fund gives Partner Funds access to this large market," Border to Coast responded.

"By allocating between China and ex-China, we will have the flexibility to manage both future risks and opportunities in China," the pension pool manager added, referring to potential China risks.

Border to Coast was founded in 2018 and managed £60 billion in assets as of March 31, 2022.