NEST broods on SRI choice

The UK’s National Employment Savings Trust (NEST) will offer members a socially responsible investment fund, one of the first investment decisions the trustee board has made as it finalises its investment strategy.

The fund will advertise in the Official Journal of the European Union for global equity SRI fund managers to tender for an initial contract, hopefully before Christmas. Mercer is the fund’s consultant and is overseeing the tender for an an actively managed global equity fund with socially responsible and ethical investment themes as core to the fund construction.

NEST will publish its first statement of investment principles in the new year, and is expected to announce further fund choices at that time.

It has done extensive research and consultation on what fund choices to offer future members, and while it expects most members to remain in the default fund consistent with other defined contribution funds, a minority may be interested in some fund choice.

The investment committee and trustee members of NEST Corporation, led by chair of trustees Lawrence Churchill, have agreed that one of the fund choices to be offered from scheme launch will be a fund focussed on investing in a socially responsible manner.

While the strategic asset allocation is yet to be set – slated for December/January– the trustees have said the fund is initially looking to invest in a passive global equity fund, a passive UK gilts fund, a passive UK index-linked fixed-interest fund, a low-risk cash management fund and a diversified beta fund which invests in a broad, diversified range of asset classes.

NEST is very focused on creating a fund that is suitable to the particular membership which is the unserviced low-income workers of the UK, and will position itself as a low-cost proposition – 0.3 per cent a year plus 2 per cent on contributions – and the default will be target-date funds.

It will launch in spring 2011 on a small scale with volunteer employers, to ensure it is ready for the onset of the anticipated higher volumes of employers and members from 2012.