Brunel Picks Two Managers to Run Low-Volatility Portfolio

Britain’s Brunel Pension Partnership has completed one of its manager searches.

German asset manager Quoniam and Robeco, a Dutch manager, will handle the £30 billion ($34 billion) local government pension pool’s Low Volatility Global Equities portfolio. The fund is starting with £400 million, but Brunel expects it to grow to £600 million.

The portfolio wants to invest in long-only stocks that aren’t as prone to rapid price fluctuations, essentially creating a low-risk environment, according to Mark Mansley, Brunel’s chief investment officer. “We aim to achieve long-term returns through exposure to the low-volatility factor and our managers’ skill,” he told CIO.

Quoniam and Robeco will divide their responsibilities evenly. Mansley said the organization was impressed by the “clarity” of the managers’ investment processes and the three firms’ aligned values.

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“For this search, two particular areas we were interested in were understanding how managers address risk of valuation bubbles in low-volatility strategies, and their use of ESG considerations to help further reduce risk,” said Mansley, who added that the organization received 50 inquiries for the selection, many of them “high-quality” candidates.

The search took a few months to complete.

After a brief pre-registration period, Brunel officially launched an active manager search for its “flagship” $2.6 billion global high alpha fund earlier this month. The inquiry ends on April 3.

The firm also selected FundRock Management to run its fund structure last June. Once it meets regulatory and risk management requirements, Brunel tackles the investment management, with direct decisions then falling on its managers.

Brunel is one of the UK’s eight local government pension plans. It combines the retirement assets of 10 funds (Avon, Buckinghamshire, Cornwall, Devon, Dorset, Environment Agency, Gloucestershire, Oxfordshire, Somerset, and Wiltshire).

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Tags: Brunel Pension Partnership, Low Volatility Global Equities Portfolio, Pension, UK

Canada’s top pension fund is teaming with an Oklahoma natural gas pipeline and infrastructure business to the tune of $3.8 billion.

The Canada Pension Plan Investment Board’s ($277.8 billion) joint venture will be with natural gas and natural gas products operator Williams Cos. The deal will set up a new platform that helps optimize Williams’ midstream developments in the Marcellus and Utica basins, the US’s largest gas-producing areas.

The move includes Williams’ Ohio Valley Midstream and Utica East Ohio Midstream System, which it just acquired from Momentum Midstream.

Michael Hill, the Canada fund’s managing director of energy and resources, told CIO the region attracted the plan to the joint venture because the basins are “expected to grow faster than other parts of Appalachia as a result of significant takeaway pipeline capacity additions, and increased local demand.”

Pipeline and infrastructure investments in the region spanning Pennsylvania, Ohio, and West Virginia have picked up steam in recent years. Last year, the Canada fund and Encino Energy backed an agreement for a private company to buy all of Chesapeake Energy’s natural gas assets in Ohio.

Canada’s pension board will invest $1.34 billion for a 35% stake. Williams, which has the other 65%, will run the business while also include the projects’ financial results in its fiscal statements.

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The Utica East Ohio system processes and performs molecule-separating procedures in natural gasses and natural gas liquids in eastern Ohio’s Utica Shale basin. The platform looks to combine the two systems (Ohio Valley and Utica East) to simplify capital spending in the region. This will also cut operating and maintenance fees while helping local natural gas producers.

The Marcellus and Utica basins are expected to supply about 40% of total US dry gas production by 2023, according to Hill.

“These transactions create a platform for continued optimization and growth, provide deleveraging, reduce capital spending on processing and fractionation capacity for OVM, and unlock further synergies through combined operatorship of the systems,” Alan Armstrong, Williams’ president and chief executive officer, said.

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Tags: Canada Pension Plan Investment Board, Infrastructure, Natural Gas, Williams Cos.