Pension trustees and investment managers are facing significant barriers with aligning their investment strategies to the Build Back Better plan according to Canada Life.
According to the Canada Life Asset Management’s ‘The Role of Institutional Money’ research institutional money is being held back from contributing to the government’s Build Back Better strategy due to a lack of long-term planning and investment opportunities.
The Build Back Better plan was first introduced in March 2021 as a way to boost economic development by investing heavily.
Pension trustees and investment managers also stated that a lack of capital, regulatory challenges, a limited will to align investment strategies with the plan and client reluctance were also major barriers.
The study also found significant disparities in how the Build Back Better strategy is now accounted for in short-term (1-3 years) and long-term (over 5 years) investment plans. In the medium term, 41 per cent and 32 per cent of pension trustees and investment managers, respectively, have investment plans concentrating on the skills and infrastructure pillars of the Build Back Better plan. While net-zero and possibilities for growth are built into 72 per cent and 93 per cent of long-term strategies, respectively.
This follows recent findings from Canada Life Asset Management, which found that the way institutional money is put to ‘good use’ is poised to change dramatically over the next decade. Institutional respondents view overseas developments and the regeneration of cities and the highstreets as potential key areas of investment.
Canada Life head of UK property Michael White says: “Since the start of the Covid-19 pandemic the government has made many calls for institutional investors to support the country’s efforts to ‘build back better’. While pension trustees and investment managers are familiar with the government’s intentions and many are showing an appetite to align their investment strategies with the key pillars of the Build Back Better plan, they are facing significant barriers. This ranges from a lack of long-term planning to limited investment opportunities.
“If the Build Back Better plan is going to be a success, it is crucial that the industry overcomes these barriers. This can only happen if stakeholders across the asset management industry work collaboratively, supported by clarity of policy, to ensure institutional money can be put to good use and create a positive impact for society.”