The EPPF implements its Investment Strategy largely through a multi-manager arrangement. Value is further added through investment activities performed in-house by the Investment Management Unit (IMU), which is the investment management and operating arm of the EPPF.
The EPPF has adopted a “Core/Satellite” approach to structuring mandates (domestic and international). Portfolio mandates are specialized along the lines of asset classes, with EPPF endeavouring to select the best equity and bond managers. This is further refined by selecting the best “Core” and best “Satellite/Aggressive” equity and bond managers.
The IMU manages cash/money market management, listed equities, listed properties, tactical assets allocation and other value-added strategies.
The strategic asset allocation is reviewed by the Strategic Investments Committee and approved by the Board of Trustees, after considering advice and recommendations by the IMU. Other investment-related third-party service providers are involved as required.
Good standards of governance should ensure that the Fund’s investments are managed appropriately and will collectively reduce the risk of material failure of an investment strategy. Governance principles define the framework of an investment policy. The Fund is governed by the Pension Funds Act, 1956. Regulation 28 of the Act is concerned with pension fund investments principles and limits / rules. By law the Fund must adhere to Regulation 28.
The Board has also taken note of PF130 issued by the Financial Sector Conduct Authority (“FSCA”) (previously known as the Financial Services Board). Whilst FSCA circulars are not legally binding on retirement funds, the Board recognises these as “recommended practice” and aim to adhere to PF130 as far as it is deemed appropriate to do so. A number of principles of good governance that specifically relate to investments have been identified by the Board. Many of these are contained in Annexure B of PF130.