London CIV, the LGPS pool for the capital’s boroughs and the City, has announced the launch of its Alternative Credit Fund (ACF) with initial assets under management for the sub-fund of £398m.
The sub-fund was launched this month with the aim of achieving a return of SONIA (the Sterling Overnight Interbank Average) +4.5%, net of fees. It expects to invest in securitised assets, loans, high-yield corporate bonds and convertible bonds, plus investment-grade corporate and government bonds.
Exposure to these assets will be both direct and indirect. Indirect exposure will be accomplished by investing the sub-fund solely in the CQS Credit Multi-Asset Fund (CMA), an alternative investment fund.
CQS, the investment manager appointed by London CIV, said it intended to deliver stable returns while optimising yield within the sub-investment grade credit market. The CMA is classified as an “Article 8 Fund” under the EU’s Sustainable Finance Disclosure Regulation, which means it promotes environmental and social issues.
Mike O’Donnell, CEO of London CIV, said the ACF would “play a part in meeting our own ambitious net-zero targets, and those of the investors in this sub-fund”.
London CIV announced last year that it intended to be net zero by 2040 – the earliest date currently set by a local authority pension pool.
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