I feel jubilant today marks the end of this bitter metrological winter. But the rain, biting winds and thermal vests under chunky sweaters has not stopped me from having a frantic February! Two more episodes of The Professional Investment Podcast have been released – one discussing whether an 80% equity allocation is too high for the LGPS and the other examining investor reaction to Trump’s DEI rollback. I’ve also revisited a series of blog posts I wrote examining the challenges facing asset managers – ahead of adding to the series in coming months. The first charted a tough decade with the rise of passive investing, the second looks at the affect of war and maverick politicians while the third examined the impact of unwinding interest rates. Next month I’ll be heading to the PLSA annual investment conference in Edinburgh so get in touch if you would like to meet. The next networking event on Tuesday, 25th March will examine whether buy-out or run-on is more sustainable – let me know if you would like to attend. And I’ll have an exciting announcement to make next month!
Is 80% to high an equity allocation for the LGPS?
The fourth episode of the second series of The Professional Investment Podcast is a punchy one! Richard J. Tomlinson, CIO at Local Pensions Partnership Investments and I discuss Kensington and Chelsea council’s decision to stop paying employer pension contributions because the scheme’s funding level has reached 207%. We talk about how a high allocation to equities was instrumental in pushing the scheme this far into the black and the implications this has for asset allocation. We mull what it tells us about the LGPS’ sustainable investment strategy and the impact consolidation would have on a scheme’s ability to set its asset allocation.
Investor reaction to Trump’s DEI rollback
What is investors’ reaction to Trump’s DEI rollback? That’s the issue I discuss with Laasya Shekaran, director of Pensions for Purpose in the latest episode of The Professional Investment Podcast. The news story of the week is a Forbes article tracking the companies rollbacking on their DEI programs. We examine whether Trump’s anti-DEI stance will result in a fundamental shift in corporate policy or if changes will be superficial. We talk about how investors − both asset managers and owners − should approach DEI both within their own organisations and in those companies they include in their portfolios. We also grapple with what changes a corporate really needs to make ensure true diversity of thought within their organisations.
A tough decade
It’s been a difficult few years for asset managers. And the changes show no signs of slowing. The UK’s government interest in pensions has led to a slew of consultations which have the potential to alter the competitive landscape. Add in major geopolitical shifts and we will continue to live in interesting times! With all this change, I’ll be adding to my series of blog posts in coming months looking at the challenges asset managers face. Let’s not forget, however, though the vicissitudes facing the sector have accelerated in recent years; the industry has already weathered a decade of change.
War and maverick politicians
The challenges facing asset managers showing no sign of slowing. After weathering a decade of change, the headwinds facing the sector became more extreme in 2022. The war in Ukraine and Liz Truss’ actions brought about a once in a generation change in financial markets. (It was great to illustrate this blog post with a photo of an iceberg lettuce as a nod to the The Daily Star’s hilarious live stream to see which lasted long an iceberg lettuce or Liz Truss!) After the dust settled on the LDI crisis, many closed DB pension schemes held wonky portfolios which caused many to stop allocations to private markets − cutting off a major source of new capital and adding to asset managers’ woes.
The great unwind
“2025 is set to be another recording breaking year for the risk transfer market” − that’s the headline of a recent press release from Hymans Robertson. In my series of posts which take an in-depth look at the challenges facing asset managers, I talk about how the rapid reversal in bond yields accelerated the buy-out journey for many closed defined benefit schemes. That post was written a year ago so the press release from Hymans shows that trend continues today.
Annual PLSA investment conference
It’s that time of year again! In just over a week, I’ll be taking the train up to Scotland for the Pensions and Lifetime Savings Association’s annual investment conference. I love this event – Edinburgh is such a great town to visit and I adore spending two days in an exhibition hall networking networking my socks off! Do get in touch if you would like to meet.
Which is more sustainable − buy-out or run-on?
Which is more sustainable – buy-out or run-on? That’s the question we’ll be addressing at the next networking event on Tuesday, 25th March at 6pm. The rise in bond yields in recent years caused a seismic shift in the funding levels of closed DB schemes. With many schemes now in surplus, this has accelerated the route to buy-out as well making run-on a viable alternative. As the government is now seeking to lift the restrictions on how pension schemes can invest their surpluses, there’s likely to be increased incentive to consider run-on rather than buy-out. We will be talking about how this has reshaped the DB investment landscape and how it will shape how these schemes invest sustainably. Joining me to debate these issues are Chris HOGG – former trustee CEO at Royal Mail and National Grid, Jenny Murray – sustainability analyst within Rothesay’s sustainability risk team, Paul Kitson – UK head of pensions consulting at EY, and Sofia Perkonigg – board director of UBS pension trustee company. Get in touch if you want to attend.
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