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  • New fund aims to offer cost-effective access to fast-growing emerging market economies for Border to Coast’s Partner Funds.
  • The Emerging Markets Equity Alpha Fund will combine the expertise of up to four external managers with the aim of producing long-term, risk-adjusted outperformance.
  • Responsible investment and integration of ESG issues will be central to manager selection.

Border to Coast Pensions Partnership (“Border to Coast”), one of the UK’s largest LGPS pools, is to launch a £1bn Emerging Markets Equity Alpha Fund, providing access to some of the world’s fastest-growing economies for its Partner Funds.

Expected to launch in the first half of 2023, the Fund will seek to leverage Border to Coast’s collective scale to deliver the benefits of pooling by securing cost-effective access to specialist managers in emerging markets. Border to Coast is seeking up to two emerging market equity managers to manage around £650m of the Fund, joining two China specialist managers already appointed.

The successful manager(s) will have demonstrable experience in emerging markets equity investing and a long-term, high conviction approach to stock selection. Given Border to Coast’s position as a responsible investor, managers will be assessed on the integration and reporting of environmental, social, and governance (ESG) issues, including climate change considerations, and their active engagement with companies.

We are very pleased to be expanding our offering with the Emerging Markets Equity Alpha Fund. We are looking to combine a selection of high-quality managers in the aim of delivering long-term, risk controlled, outperformance for our Partner Funds. Emerging markets are very diverse, and this year we have seen first hand how polarised individual market performance can be. We are therefore expecting successful managers to be experts in both bottom-up stock selection and country risk analysis.

“Importantly, we want to partner with managers that have fully integrated ESG risk factors, including climate change considerations, into their investment process, reflecting our own beliefs in responsible investment and active stewardship.”

Graham Long, Border to Coast’s Head of External Management

Once launched, the Fund will seek to outperform the MSCI Emerging Markets Index by at least 2% a year (net of fees) over rolling three-year periods.

Border to Coast has produced an online presentation for managers interested in bidding for the Emerging Markets Equity Alpha Fund providing further information about the selection process. This is available on the Border to Coast website: Emerging Markets Equity Alpha Fund manager presentation.

As an organisation wholly owned by public sector entities, Border to Coast is subject to public procurement rules. The formal tender process will be launched on Wednesday 4 May 2022, with the successful manager(s) expected to be appointed in the second half of 2022. Full details will be in the ITT (Invitation to Tender) documents available from bordertocoast@mercer.com.

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