Pension schemes looking to reach and surpass the private markets allocation targets of the Mansion House Accord must not do so “for its own sake” and make sure such investments are beneficial to scheme members, according to Alistair Byrne, head of UK and Ireland client coverage at State Street Investment Management.
In 2025, then Chancellor Rachel Reeves oversaw the signature of the Mansion House Accord, in which signatories committed to allocate at least 10 per cent of assets in main DC default funds to private market investments by 2030. As part of the Pension Schemes Act, the government now has powers to mandate schemes to hit this target if deemed necessary.
“10 per cent (invested in private markets) for its own sake shouldn’t be the question,” says Byrne in comments made to Corporate Adviser.
“Rather it should be how can we get 10 per cent in private assets that will be incremental to the outcomes of the members. Time will tell.”
Byrne was also keen to address the issue of a fees centric culture in private assets, an issue also raised at the UK Private Capital pensions summit this week.
He says: “It’s quite hard to break that dynamic (of focus on fees in private markets). Mansion House has probably been more powerful than Value for Money in terms of saying it can’t just be a race to the cheapest investment solution. It’s not just about the price. It’s also about sort of quality of the portfolio, together with a more direct encouragement to be in alternatives and private assets.”
State Street controls about £161bn of UK institutional assets, as of 31 March 2025. That ranked it sixth among managers of such assets, behind BlackRock, L&G, Insight, Aberdeen and Schroders.
Of the changing relationships with schemes, Byrne says: “We used to have had lots of small pension schemes as clients. Now we’ve got kind of fewer clients, but they’re bigger partnerships, they’re deeper partnerships.
“The old joke was you used to have corporate clients that you talk to four times a year. You go along, talk to trustees, and explain to them how the fund has done. But at these big partnership relationships we have now, conversations are happening every day. Things are evolving to the point we talk to them four times in the morning rather than four times a year.”
State Street Investment Management (formerly State Street Global Advisors) is particularly well known for index investing.
Indexes such as the S&P 500 returned 19 per cent year on year as of August 31. However, concerns have also been raised about consolidation risk; the top 10 holdings now represent more than a quarter of the MSCI World Index, approximately four times their weight compared to 15 years ago.
Byrne seeks to temper any risk to institutional capital: “Obviously a lot of value has been created there (in equities). Schemes have done well from participating in in that. The threat of consolidation is not a reason not to do indexation, but it is a reason to be thoughtful about the indices you’re using and the asset allocation you’re using, and maybe you don’t go large market cap in the US, and diversify it a bit more. Maybe you use some alternative index structures where you’re not as affected by market cap.”