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Nest gains global access to corporate bond market

Published: 14 November 2019

Following its recent tender, Nest has appointed Wells Fargo Asset Management (WFAM) to manage a segregated, global corporate bond mandate.

WFAM will immediately start to invest on behalf of Nest and its 8 million members, with the pension scheme aiming to invest around £500 million into global bonds over the course of the next 12 months.
Nest has been investing in the UK corporate bond market for a number of years but is looking to expand out further, taking advantage of the favourable and stable returns offered globally in this asset class.
Anders Lundgren, Nest’s Head of Public Markets and Investment Strategy, explains further:
“This step is a natural progression for a scheme of Nest’s size and helps us to further develop our sophisticated investment strategy. 
“The UK bond market has been a successful performer in our funds over the past few years. We’ve looked ahead and seen that there are further opportunities globally in this market, which is why we’re making this move. 
“WFAM has managed credit for over 25 years, which means they have gone through multiple credit cycles - experience that’s hard to replicate. They have a dedicated ESG strategy team to ensure we can continue to generate sustained, long-term returns for our members.
“A segregated mandate gives us greater control over how our member’s money is invested, ensuring we adhere to our strong ESG criteria.”

The announcement by the UK’s largest auto enrolment pension scheme is a landmark appointment for WFAM, which is committing new, dedicated resources to the UK defined contribution market.  

Nico Marais, CEO of Wells Fargo Asset Management:
“We are honoured that Nest has selected Wells Fargo Asset Management to manage its new global investment grade credit mandate. 
“Our investment and research specialists look forward to harnessing the firm’s investment acumen, expertise on risk management, and integrated environmental, social and governance platform to help Nest and its members achieve their investment objectives.”

Almost 50 asset managers submitted bids to manage this mandate, from which WFAM has been appointed to run an active, segregated account with a currency hedge. The fund will be evergreen and able to scale up to meet the demands of the rapidly growing pension scheme which takes around £400 million a month in member contributions. 
Notes to editors
The new mandate will be added to the existing range of ‘building blocks’ funds that make up the scheme’s Retirement Date Funds and some alternative fund choices.
About Nest
Nest was set up by government to help deliver auto enrolment and ensure every employer has a pension scheme available for their eligible workers. It is now the largest pension scheme in the UK with more than 8 million members, looking after £8.5 billion worth of assets on their behalf. 
Forecasts put Nest as having £20 billion assets under management by 2022 and by the late 2020s, one third of the working population is expected to have a Nest pension pot.
Nest is a not-for-profit pension scheme which is committed to helping millions of people, and particularly those on low income, enjoy a better retirement. It offers savers an award-winning investment strategy through a diversified portfolio and is a committed responsible investor.
About Wells Fargo Asset Management
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. WFAM has 29 specialised investment teams managing £392 billion AUM* across a broad range of asset classes. It has 523 investment professionals with 20 years average industry experience and 24 offices worldwide. 
*as at 30 September 2019