Key Takeaways
- • Nest, the UK's largest workplace pensions provider with a £68bn scheme, appointed Wellington Management to run a £3.5bn emerging markets equities mandate, shifting the strategy to an 'active, fundamental, discretionary approach' according to Net Zero Investor.
- • Nest says the decision followed an internal review and is intended to strengthen ESG risk management and deepen company-level engagement in its EM portfolio.
- • The mandate is segregated, bringing over 80% of Nest's assets under segregated mandates, and is expected to hold between 100 and 150 stocks.
- • Nest's largest EM equity exposure sits in its higher risk fund (7.3%), versus 4.7% in its 2045 retirement date fund, and the scheme recognises EM equities face greater physical climate risk.
Summary
Nest, the UK's largest workplace pensions provider, has appointed Wellington Management to manage a £3.5bn emerging markets equities strategy, according to Net Zero Investor. The £68bn scheme said the decision followed an internal review and is intended to strengthen ESG risk management. In a statement, Nest said it is moving its emerging markets equity strategy to a more 'active, fundamental, discretionary approach'. Rachel Farrell, Nest's director of public and private markets, said the decision is in the best long-term financial interests of Nest's 14 million members.
The appointment is the latest step in Nest's push toward segregated mandates. Earlier this year the scheme launched a search for a global ethical equity mandate, also segregated and customised to its ethical investment beliefs. Nest awarded its first segregated mandate in 2018, a commodities mandate to CoreCommodity Management. Over 80% of Nest's assets are now under segregated mandates. Farrell said this gives the scheme 'greater control over how mandates are implemented and greater confidence in managing governance, sustainability, climate and market-specific risks'.
Nest said the choice of Wellington was also driven by its preference for engagement and stewardship, and that it was looking to deepen company-level engagement within its emerging markets portfolio. The strategy is expected to hold between 100 and 150 stocks while maintaining on-the-ground stewardship. According to Wellington's latest disclosures, the manager held over 18,600 meetings with 5,000 public market issuers last year, with climate-related engagements accounting for 13% of conversations and governance issues 87%. Aisling Freiheit, Wellington's head of EMEA, said the most enduring relationships between asset owners and managers are built on trust, alignment and shared purpose.
The appointment also aligns with Nest's EM investment beliefs. The scheme's largest EM equity exposure is through its higher risk fund at 7.3%, compared with 4.7% for its 2045 retirement date fund. Nest's climate investment disclosures state that EM equities are more exposed to physical climate risks, a recognition that led to a re-underwriting of the asset class in 2025 and a shift in manager expectations reflected in this appointment.
The appointment is the latest step in Nest's push toward segregated mandates. Earlier this year the scheme launched a search for a global ethical equity mandate, also segregated and customised to its ethical investment beliefs. Nest awarded its first segregated mandate in 2018, a commodities mandate to CoreCommodity Management. Over 80% of Nest's assets are now under segregated mandates. Farrell said this gives the scheme 'greater control over how mandates are implemented and greater confidence in managing governance, sustainability, climate and market-specific risks'.
Nest said the choice of Wellington was also driven by its preference for engagement and stewardship, and that it was looking to deepen company-level engagement within its emerging markets portfolio. The strategy is expected to hold between 100 and 150 stocks while maintaining on-the-ground stewardship. According to Wellington's latest disclosures, the manager held over 18,600 meetings with 5,000 public market issuers last year, with climate-related engagements accounting for 13% of conversations and governance issues 87%. Aisling Freiheit, Wellington's head of EMEA, said the most enduring relationships between asset owners and managers are built on trust, alignment and shared purpose.
The appointment also aligns with Nest's EM investment beliefs. The scheme's largest EM equity exposure is through its higher risk fund at 7.3%, compared with 4.7% for its 2045 retirement date fund. Nest's climate investment disclosures state that EM equities are more exposed to physical climate risks, a recognition that led to a re-underwriting of the asset class in 2025 and a shift in manager expectations reflected in this appointment.
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