NEST’s strategy to diversify members’ portfolios has seen it hand a high yield bond mandate to JP Morgan Asset Management.
In a bid to boost returns in a low yield bond environment, NEST has given the US asset manager an initial £40m to invest through JP Morgan Life High Yield Opportunities fund.
The fund will be used as a building block of NEST’s Retirement Date Funds and represent 3% of the master trust’s overall portfolio.
NEST said JP Morgan beat off bids from other asset managers to win the mandate thanks to a robust risk management approach and commitment to integrating environmental, social and governance issues into the investment processes.
The firm also gave management confidence that it understood complex business models and could spot companies capable of repaying its debt.
NEST deputy chief investment officer John St. Hill said adding high yielding bonds to the portfolio will enhance returns at a time of long-term low interest rates.
“This is a long term strategic move for us,” he added. “Diversifying our members’ portfolios across a range of asset classes is the best way to manage risks and deliver returns.
“Like other large institutional investors we see high yield as an important tool in the box.”
JP Morgan Asset Management client adviser Bob Cast said: “NEST aims to provide a high quality low cost workplace pension to millions of people and we’re very proud to now be part of this.”
