The impact-oriented equities mandate would likely focus on the UN Sustainable Development Goals, according to Christian Würth, adviser at FDC.He said that impact investing was more comparable to private equity investing, but that FDC might set up the impact sub-fund as a listed equities only fund. “Investing in unlisted equities would be more resource- and workload-intensive in various respects,” he told IPE.However, he emphasised that the fund had not made any final decisions about the new green bond and impact investing allocations, as there were still many details to be decided.The decision to launch the sub-funds was taken following a review of FDC’s investment strategy, part of which was dedicated to the reserve fund’s approach to socially responsible investment.The fund also decided that sustainable development considerations would be reinforced as part of manager selection for any new actively managed mandates, according to Würth.Asked what motivated the FDC’s responsible investment decisions, he said they were partly related to the analysis of the commitments Luxembourg had made by ratifying the Paris agreement on climate change and supporting the adoption of the United Nation’s 2030 agenda for sustainable development.Underperforming manager gets the bootThe reserve fund has also changed its strategic asset allocation as part of the review of its investment strategy.It has increased the target allocation for public equities from 32.5% to 40%, offsetting this by decreasing its bond quota from 54% to 50.5% and its money market quota from 5% to 1%.However, the new equity quota is quite close to the actual exposure, which stood at around 39% as of the end of June. The FDC achieved a return of 5.3% on its investments in 2016, with the SICAV gaining 5.7%. The investment company underperformed its benchmark by 80bp, which FDC said was primarily due to the underperformance of certain active global equity and bond managers.It terminated the mandate of one of its active global equity managers in the fourth quarter of last year due to underperformance, reallocating around €900m of assets to the other portfolio managers for this asset class.According to the reserve fund’s annual report, JP Morgan Asset Management lost its mandate. The €17.1bn Luxembourg pension reserve fund, Fonds de Compensation (FDC), is to launch two sub-funds dedicated to green bonds and equities “with positive impact”, respectively.The size of the sub-funds is still to be determined, but could amount to €50m-€100m each and would count towards the fund’s existing target quotas for equities and bonds.FDC intends to launch the sub-funds next year.They will form part of the FDC’s investment vehicle, Fonds de Compensation de la Sécurité Sociale, SICAV-FIS, which invests the majority (€15.7bn) of the reserve fund’s assets.