Equity Overlay / Downside Risk Management

Northern LGPS is seeking to control equity risk on a medium-term basis and possibly on a longer-term strategic basis through the use of an equity overlay solution(s). Northern LGPS is looking to renew its framework of approved equity overlay suppliers to offer overlay management services as required during the framework duration. It is anticipated that mandates will be awarded on an individual basis to suppliers within this framework as required by the underlying plans. Suppliers must be able to offer equity risk / drawdown control through a broad range of overlay solutions ranging from basic put / put-spread protection through to more complex strategies (as required by individual awards within the framework), and may also be required to offer mechanisms for funding (e.g. synthetic equity replication or other funding routes). The approved supplier framework will target a minimum of 3 manager appointments. Northern LGPS are seeking proposals from asset managers. Bank or other non-fiduciary solutions will be excluded. Suppliers must be able to implement solutions using their own trading relationships. Proposals requiring use of client ISDAs will be excluded. Suppliers must be regulated to offer services to UK institutional investors. It is estimated that the Northern LGPS will seek to deploy Equity Risk Overlay mandates on up to GBP 3bn initially. This figure represents the client's total equity exposure that might be referenced by overlay proposals. Individual mandates within the framework are expected to vary in sizes ranging from GBP 100m to GBP 2bn, with the framework expected to deploy multiple overlay solutions over time. There is also the potential for aggregate mandate size to grow through the incorporation of other asset classes over time. Estimated contract value is £7,236,000 (exc VAT) and £8,640,000 (including VAT) Procedure Type is Competitive Procedure with Negotiation