St James’s Place (SJP) has swapped out Blackrock and the three other managers on its Global Equity mandate as it retools the fund around a more ESG-friendly approach.
From 22 November, the £14bn fund will target a lower carbon footprint that will be half that of its benchmark at launch. Its benchmark will change from the MSCI All Country World Equal Weighted to a capital weighted version of the index.
Existing managers, Blackrock, JO Hambro, Edgepoint and Sands Capital have been dropped and replaced by State Street Global Advisors, Man Numeric and LA Capital.
Each manager will be responsible for their own strategy, which will be equally weighted to provide a “balanced style profile”.
Investment management fees fall to 0.10%
SJP said the incoming trio of managers have “proven track records” in integrating ESG factors into their investment processes and that the new approach would deliver “smoother, more consistent returns for clients,” while also cutting the carbon footprint of the fund.
In another change, around two thirds of the fund will be actively managed, up from 40% previously. State Street will manage a bespoke passive strategy that is designed to correlate closely to the new benchmark, while Man Numeric and LA Capital each oversee an active quant strategy.
Despite the active portion of the fund increasing, investment manager fees will come down by 0.12 percentage points to 0.10% per annum.
In its last value assessment, SJP deemed Global Equity good value, scoring it top marks for its ongoing charges figure of 1.55% per annum. However, the fund was given middling scores for relative performance and responsible investing.
Net zero commitments
SJP director of investment management Rob Gardner said the changes to Global Equity would play a key part in helping the wealth manager achieve its net zero commitments and promise to clients of “delivering financial wellbeing in a world worth living in”.
“As a £14bn fund, we have been working hard on these changes over the last few years and we are delighted to evolve it in a way that can reduce its overall carbon footprint,” Gardner said.
“On a standalone basis, it becomes one of the largest of its type to integrate ESG factors into its decision-making processes, both to find investment opportunities and mitigate risks.”
SJP CIO Tom Beal added the new “diversified, index-aware structure of the fund” captures the benefits of passive investing, while retaining the potential to “moderately outperform” its global equity benchmark over the long term.
“We want our managers to actively own the businesses they invest in so, to facilitate that, they will significantly reduce the number of underlying companies in the fund in comparison to the broad market,” Beal said.
“The fund will continue to allocate to all of the underlying industries within the benchmark but will look to bias its exposure to companies with strong ESG credentials and those that are transitioning to net zero.”
See also: SJP’s focus on carbon for passive range deemed ‘odd’
