The National Employment Savings Trust (NEST) has picked Legal & General Investment Management to run two real estate mandates.
The brief is the mass-market pension scheme's first direct investment into commercial property. It said the allocation would help give members access to long-term and sustainable investment growth.
NEST's target date fund structure and expected scale ensure that it can incorporate these mandates as part of a diversified and actively risk-managed approach, while maintaining a low member charge, it added.
NEST led a highly competitive procurement process in order to select LGIM and its property platform, Legal & General Property (LGP), as the manager for its two real estate mandates. These new building blocks will make up a sizeable portion of the NEST Retirement Date Funds, as well as the NEST Higher Risk Fund and NEST Ethical Fund options.
NEST chief investment officer Mark Fawcett said: "We're always searching for cost-efficient opportunities to access rewarded risk for our members. These new mandates, along with other building blocks we add in the future, continue to allow us to develop our award winning strategy.
L&G Property managing director Bill Hughes added: "NEST is an industry-leading platform and likely to be one of the most significant participants in the UK pensions industry over the next decade, therefore we see this strategic decision to include direct property within its key building blocks as a major step forward for commercial real estate within the new world of DC pensions and a significant endorsement of our funds."
NEST is working with more than 400 large employers for automatic enrolment and currently has about 250,000 members.
‘Important to have an anchor’
Lack of innovation for solutions
Some 2,000 consumers affected
Achievements, charity work and other happy snippets