Nearly 89 per cent of Local Government Pension Scheme (LGPS) fund experts in England and Wales indicate their funds expect to increase their allocation to local social investments over the next several years, according to Alpha Real Capital.
According to Alpha Real Capital research, when asked how their Fund defines local investing, 54 per cent said it was within their local council area, 26 per cent said it was throughout the UK, and 20 per cent said it was within their pool.
This follows the government’s announcement earlier this year that it will utilise £16bn from the LGPS to fund local project investments as part of the Levelling Up initiative. The government’s Levelling Up White Paper outlined a plan to improve the UK, including 12 tasks that must all be fulfilled by 2030.
According to Alpha, there is a growing trend for LGPS funds to focus more on local place-based investing. Place-based social investments seek to produce beneficial, quantifiable social effects alongside attractive financial returns.
Alpha says that investing in social real estate can be particularly beneficial for pension funds wishing to distribute cash while attempting to make a good impact, and that this can be done both nationally and regionally, such as within a specific location.
Stuart Hanson, Client Solutions, Alpha Real Capital said: “Our research shows clearly that LGPS funds are very much focused on increasing their level of local and social investing, and the impact of this could be huge. Indeed, if only 5 per cent of LGPS funds’ combined assets were allocated to local investment, this would unlock as much as £16bn for investment in assets that contribute towards positive social outcomes.”
James Murray, Fund Manager, Social Real Estate, Alpha Real Capital said: “Local investing provides LGPS funds with a unique opportunity to meet their financial objectives, and also make a significant positive social impact. The approach can be targeted or spread broadly at a national level, and we are seeing a growing trend towards place-based impacts that a hybrid national and regional approach offers.”
Phillip Rose, CEO, Alpha Real Capital said: “Investing locally in social real estate allows LGPS funds to make a real difference to social outcomes in terms of the quality and availability of social services, quality of life and economic opportunity. In Alpha’s experience, this can be achieved with attractive, long-term investment returns that are significantly inflation-linked.”