The provider is calling on asset managers to work with it to develop innovative new ways to bring private credit investment to DC savers at an affordable price.
Nest says the traditional model of small closed-ended funds is unlikely to be appropriate for its needs. Instead it is seeking managers that can operate evergreen, scalable funds focusing on unlisted infrastructure debt, real estate debt and corporate loans.
Nest says it will in future have enough assets under management to explore direct and co-investment opportunities.
Nest chief investment officer Mark Fawcett says:“Developed market equities and bonds are looking fairly fully valued. With volatility on the rise, we must find cost-effective ways to access alternative sources of return and diversify risk for our members.
“We see long term potential in private markets and alternative asset classes. We’ve recently added commodities and are now looking to add private credit to our toolbox. We don’t buy the argument that private credit is out of reach for DC schemes. Our members should have access to the same opportunities as pension savers in large, sophisticated DB schemes.
“DC pension savings are soon going to dominate the market and fund managers are beginning to recognise this. They’ll need to think creatively about what this new generation of savers requires and be willing to negotiate seriously on fees.
“We’re looking to work with innovative fund managers who see the future potential in this market and want constructive, long term relationships with their clients based on pension savers’ best interests.”
