After a quiet start to April, school holidays ended and our capital city sprang back to life. The tube filled, bars were once again rammed on a Thursday night and we all dashed from one event to the next. A cascade of articles was published this month starting with a look at the impact of US and UK elections on multi-asset managers for Professional Adviser. There were three pieces for MandateWire published examining the impact of the buyout bonanza on insurers’ green ambitions, the development of LTAFs and the approach of an in-coming Labour government to encourage pension schemes to invest in UK plc. A feature looking at DC consolidation examined how we need to look beyond master trusts was published by Pensions Expert. I held my latest sustainable networking event as well chairing a debate for AIMSE’s investment consultant event. I also wrote the latest in a series of blogs looking at the challenges facing asset managers as well as making a video about the dramatic changes in defined benefit schemes’ funding position. The next networking event takes place on Wednesday, 19th June when we will be discussing whether cognitive diversity help asset managers and owners to be better sustainable investors. Get in touch if you would like to attend!

US and UK elections: Opportunity or not for multi-asset investors?

With over 40% of the world’s population voting this year, 2024 will prove an interesting test case for multi-asset managers to see how political events shape the outlook for different asset classes. My latest feature for Professional Adviser looks at how investors have not traditionally viewed elections as events which make a material difference. While this is likely to be the case for the US elections, the UK election could be more interesting. A Labour victory could make the country “boringly investable again”. As the UK is on a low price-to-earnings ratio, this could rebound if Labour can stimulate growth. But despite the excitement caused by elections, macro-economics is still the key driver of portfolio design. Long term trends like demographics, decarbonsiation and deglobalisation are all likely to cause inflation to spike more frequently which needs to be considered when designing a multi-asset portfolio.

Pension risk transfers expected to fuel insurer appetite for green investments

The buyout bonanza means insurances companies are set to become stewards of hundreds of billions of asset in coming years. This MandateWire article asks how insurers will invest these assets given their eye-catching net zero targets with commitments to half emissions by 2030. With all these additional assets to manage, insurers will need to take pragmatic approach to sustainability by helping the whole economy to transition. It might easier to achieve this through alternative asset classes than public listed securities.

Are long-term asset funds about to lift off?

WTW recently announced its plans to launch a private equity-focused LTAF later this year in the latest sign these products are about to lift off. This MandateWire piece looks at how pension schemes are likely to use these strategies. Speed of adoption will depend on the sophistication of the scheme’s governance. While some pension providers and asset managers might build LTAFs which offer access to multiple alternative asset classes, investment consultants prefer to select best-in-class managers. It’s also worth remembering there are other structures which schemes can use to access these asset classes so not every scheme will opt for an LTAF.

Schemes told to consider global diversification needs amid pressure to invest UK assets

Politicians are encouraging pension schemes to invest in the UK. This MandateWire feature looks at how an incoming Labour government might approach this issue. In its financial services review, Labour discusses the possibility of a British ‘Tibi’ scheme to increase institutional investment in venture capital, small-cap growth and infrastructure. But while this might be the political aspiration, questions need to be answered about how to create that demand from pension schemes and ensure there is a supply of the right type of assets. And the reality remains that pension prefer to invest globally to diversify their risks.

DC consolidation: a complex picture

With an emerging cross-party consensus on the need for greater consolidation in pensions, there is a danger politicians will focus too much on master trusts and neglect other areas of defined contribution which need improvement. My latest article for Pensions Expert looks at the complexity of improving contracted-out pension schemes as well as master trusts. Legacy schemes are another area which needs review. It’s also vital policy makers do not become too caught up in consolidation for the sake of other political imperatives, such as improving investment in UK plc. They must ensure improving members’ retirement drives all their decisions.

How to make net zero a reality

In April, we were back in the Betsey Trotwood to discuss how to make net zero a reality. This was the first of a new style of occasional event where we examine what input we need from policy makers and businesses as well as investors to create positive change. The audience was on sparkling form asking great questions which tackled a broad range of issues. My panellists David Spreckley, Tim Leunig and Greg Rosen were insightful, entertaining and humorous. This event underlined the importance of policy makers, businesses and investors talking more so we can understand everyone’s perspective better!

The house believes run-on is best for DB

The day after my sustainable networking event, I headed to Capital Group’s fabulous new offices in Paddington. I greatly enjoyed moderating ‘the house believes run-on is best for DB’ debate at the AIMSE consultants’ conference. Steve Hodder argued in favour of the motion and Richard Gibson against. It was a lively discussion with great questions from the floor. Based on a show of hands, Steve won overwhelmingly! The views from the office were spectacular too!

The buyout bonanza

The latest in my series of blog posts looking at the challenges facing asset managers examines how they should react to the great buyout bonanza. With scheme surpluses growing by more than £110bn in 2023 compared with 2022, a great asset transfer to insurers from DB schemes is underway. The post looks at what opportunities there are for asset managers to make this most of this transition and highlights how managers will need to navigate insurance in-house capability, bounded capital requirements and the need for matching-asset adjustments

If a picture is worth 1,000 words..

It’s been a while since I’ve turned my office into a studio to record a video but a chart from the Pension Protection Fund’s Purple Book was just too compelling. If a picture is worth a thousand words, then the pension surpluses chart is worth £50bn to the insurance sector! The image sums up the changes the UK’s defined benefit sector has experienced over the last two years. These extraordinary changes have huge ramifications for pension schemes, investment consultants and asset managers. Future videos will examine the implications.

Can cognitive diversity help asset managers and owners to be better sustainable investors?

I’m looking forward to hosting my next networking event on Wednesday, 19th June when we will be discussing how cognitive diversity can help asset managers and owners to manage sustainable investment challenges at 6pm in Betsey Trotwood. Joining me in this debate is Pat Sharman and Sasha Scott who both have interesting perspectives to share on on how cognitively diversity will be beneficial when we tackle big issues like climate change and biodiversity loss. A third panellist will be announced shortly. Get in touch if you would like to come along!

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