Nest has confirmed a new mandate with asset manager Amundi to help make the managing of its portfolio more efficient.

Amundi will be providing Nest access to derivative contracts for two main objectives in the scheme’s portfolio, namely to rebalance Nest’s portfolio to target exposure when it’s proving difficult to do through equity and credit markets, and to reduce drag on performance by equitising cash set aside for private market deployment.

Nest’s interest in derivatives came from their ability to “quickly rebalance portfolios” in the wake of the market volatility resulting from the pandemic, noting that derivatives could allow the scheme to quickly reach target exposures and ensure their members benefit when markets recover.

This announcement comes in the wake of Nest’s existing partnership with Amundi, as the asset manager was chosen to manage it active emerging market debt portfolio in 2016 and for a private credit mandate in 2019.

Nest have not committed a fixed amount of money to the mandate, instead pledging to use derivatives in specific circumstances to assist in the continued building of an investment strategy suitable for all seasons.

Nest head of public markets and real estate, Anders Lundgren, commented: “We’re pleased to enhance our existing partnership with Amundi. They continue to demonstrate a strong handling on both managing ESG risks and our credit exposure, both crucial elements as Nest grows in size and influence.

“This mandate can also put any capital we have saved up for our private market investments to good use. We want to avoid any drag on performance and keep our members’ money busy to help boost their pension pots.”

Amundi UK CEO, Philippe d’Orgeval, added: “We are pleased to continue growing our partnership with Nest, by supporting their members with solutions to protect and grow their retirement savings.

"This unique mandate will help reduce various risks, make portfolio management more efficient, and is a useful way to gain exposure to various assets and investment opportunities as we enter a challenging investment environment.”

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