Keeping it private

It’s all about the private markets at the moment for institutional investors right down to retail. Gill Wadsworth took on the subject noting that Chancellor Rachel Reeves was set to unveil Mansion House Compact II which sets new investment targets for the nation’s largest defined contribution (DC) pension providers, including increases in allocations to private markets from 5 per cent to 10 per cent.

Wadsworth writes that the more aggressive objectives are a result of slow progress in investment to unlisted equities following the original 2023 Compact which set voluntary, non-binding agreements between nine of the UK’s largest DC pension providers to allocate 5 per cent of assets in their default funds to unlisted equities by 2030.

Signatories included Aviva, Scottish Widows, Legal & General, Aegon, Phoenix, Nest, Smart Pension, M&G and Mercer.

Coincidentally, Mercer published its Large Asset Owners Report which revealed that there is some evidence that European LAOs, which may have been under-allocated to private markets compared to their US peers, are now seeking to close this gap. Almost half (48 per cent) of European LAOs allocated investments to private markets in the last 12 months, compared with 27 per cent of those based in the US.

Our In My Opinion this week was from 21Shares’ Duncan Moir who predicts that the other thing that institutional investors will be increasing their investment in are cryptocurrencies. "Pension funds are buying into bitcoin through exchange-traded products. As are charities and endowments. Investment bank bosses who once poured scorn on digital assets are quietly changing their position," Moir writes.

Beverly Chandler, Managing Editor, Institutional Asset Manager

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