After months of rain, May’s few warm days felt fabulous. Fingers crossed we’ll have more time in the sun once the summer season officially commences! I started the month chairing a session on role of private debt in financing the transition at Private Debt Investor’s Europe summit. My blog post examined the confusing political agenda which has emerged for UK workplace schemes. I also posted a video examining if the buyout bonanza is an opportunity for asset managers. An article for MandateWire gives an update on the introduction of auto-enrolment in Ireland and potential opportunities for asset managers. And in a piece of exceptional timing, my feature looking at whether rate rises would materialise this year was published just as Rishi Sunak announced the election!
The role of private debt in energy transition
I enjoyed chairing the role of private debt financing the transition at the Private Debt Investor’s Europe summit. Our discussion looked at how regulation was driving the green transition and how investors were using debt finance to drive decarbonisation. We touched on the challenge of sustainability becoming more political concluding this often more sound and fury than a fundamental change in investor behaviour.
Value for money
A confusing political agenda has developed in recent years for UK workplace pension schemes. My post examining the challenges facing asset managers looks at the current muddled political thinking about the purpose of pensions. Those who have signed up to the Mansion House reforms aim to invest 5% of their portfolios in unlisted equities by 2030. But is it the job of pension schemes to help a government to invigorate a mismanaged economy? Hiding under this political agenda is a more important question for the nearly 11 million auto-enrolled UK citizens – are these schemes giving them value for money? Is fixed income going to be the real winner now it offers decent yields? Do the economics of private equity and debt still add up in a higher interest rate environment? And will the greatest opportunities for asset managers be created by a robust value for money framework?
Is the great buyout bonanza an opportunity for asset managers?
The implications of the much-improved funding levels of defined benefit schemes are something I’ve addressed in recent articles. This video asks if the £50bn annual transfer to insurance companies could create opportunities. It explains navigating in-house expertise and regulatory constraints will make it difficult for managers to access these assets.
What can managers expect from Ireland’ auto-enrolment system?
Ireland’s auto-enrolment system is expected to go live in the first quarter of 2025. Over a span of 10 years, this retirement system is expected to generate around €21bn in funds under management, with the state contributing €3bn and savers and employers contributing €9bn each. My latest article for MandateWire provides an update as well as the key differences to the UK’s auto-enrolment system. There is an opportunity for asset managers to become one of the investment providers in the new system with the investment tender expected to be launched very soon. There will be low-, medium- and high-risk funds which will be used in the default fund to offer a lifestyle strategy. While up to four managers could be used in each risk fund, the exact numbers will not be known until the investment tender is published.
Back to low inflation: How we can expect the rest of 2024 to play out?
What happens if the anticipated interest rate cuts don’t materialise this year? My latest feature for Professional Adviser explores how multi-asset managers can’t count on a rate cut. Published just as the Prime Minister announced the election, the feature explains how even though inflation has just fallen to its lowest level, core and services cost prices have remained high. As a result, financial markets pushed out the expected UK interest cut to August form June and illustrates how sticky inflation remains. Multi-asset managers need to ensure their portfolios are positioned in case rate cuts don’t materialise and be aware demographics, deglobalisation and decarbonisation are likely to make inflation higher in the future.
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