UK's Nest Moves £3.5 Billion Emerging Market Equity Mandate to Wellington

LONDON — Nest, Britain's largest workplace pension scheme, has shifted its entire £3.5 billion ($4.6 billion) emerging market equity allocation to US active manager Wellington Management, ending more than a decade of index investing. The £68 billion scheme, which automatically enrolls over 14 million UK workers, had run the mandate passively since 2014, most recently via Northern Trust's Climate Aware Emerging Markets Equity Strategy. The passive approach left Nest with small stakes in more than 1,000 stocks, limiting its ability to engage portfolio companies on climate change, diversity and workers' rights, said Rachel Farrell, Nest's director of public and private markets. Wellington, which manages $1.3 trillion in assets including $44 billion in emerging market equities, will run a concentrated 100-150 stock portfolio benchmarked to the MSCI Emerging Market index, targeting 100 basis points of annual outperformance. The MSCI EM index is up 22% year to date, versus 9% for the MSCI World. Nest holds about 5.2% of assets in emerging market equities and takes in roughly £700 million monthly.