Corporate Adviser
  • Content Hubs
  • Magazine
  • Alerts
  • Events
  • Video
    • Master Trust Conference 2024 videos
  • Research & Guides
  • About
  • Contact
  • Home
  • News
  • In Depth
  • Profile
  • Pensions
    • Auto-enrolment
    • DB
    • DC
    • Defaults
    • Investment
    • Master Trusts
    • Sipps & SSAS
    • Taxation
  • Group Risk
    • Group Life
    • Group IP
    • Group CIC
    • Mental Health
    • Rehab
    • Wellbeing
  • Healthcare
    • Musculoskeletal
    • Mental Health
    • IPT
    • Wellbeing
    • Trusts
    • Cash Plans
  • Wellbeing
    • Mental Health
    • Health & Wellbeing
    • Financial resilience
  • ESG
No Result
View All Result
Corporate Adviser
No Result
View All Result

UK schemes increase exposure to illiquid assets

by Emma Simon
September 6, 2021
Share on FacebookShare on TwitterShare on LinkedInShare on Pinterest

UK pension schemes are increasing their allocations to illiquid assets in response to increased transparency about opportunities and diversification benefits. 

The research shows 85 per cent of professional pension fund investors say the scheme they work for will increase allocation to illiquid assets over the next three years, with 7 per cent expecting a ‘significant rise’. 

This survey, conducted by Alpha Real Capital found that 58 per cent of pension fund investors already have up to a quarter of their fund in illiquid assets as part of their investment strategy, with almost two out of five schemes (37 per cent) allocating 10 per cent of their portfolio to illiquid assets. 

Only 2 per cent of schemes had not illiquid asset allocation. 

Alpha’s research shows the main reason for increasing interest in illiquid assets is greater transparency around the asset class with 79 per cent saying they are increasing allocations because of that. However, 69 per cent say increased opportunities to invest in illiquid assets is driving interest.

Around 44 per cent of those questioned said they are increasing allocations to illiquid investments because of a growing desire to diversify their portfolio while 8 per cent say improvements in the premium for investing in illiquid assets is driving interest.

Most investors are happy with an additional premium for investing in illiquid assets of less than 1 per cent, the research found. Around 58 per cent say they expect an additional premium of between 0.5 per cent and 1 per cent while 4 per cent will settle for less than 0.5 per cent. However, a third (34 per cent) expect a premium of between 1 per cent and 1.5 per cent while 4 per cent look for an additional premium of more than 1.5 per cent.

Boris Mikhailov, head of client solutions at Alpha Real Capital said: “Illiquid assets offer the opportunity to earn a premium above more liquid assets which helps explain their growing popularity with pension scheme investors. 

“With returns on some other asset classes squeezed, it makes sense to consider illiquid assets and nearly six out of 10 schemes are already allocating up to 25 per cent to the sector and the overwhelming majority are using illiquid assets in some shape or form.”

VIDEO FROM ROYAL LONDON


Find out more about how to support the switching of a workplace pension

Corporate Adviser Special Report

REQUEST YOUR COPY

Most Popular

  • HMRC research raises spectre of Budget cuts to salary sacrifice

  • NatWest Cushon spells out path to £25bn

  • Isio appoints Secondsight MD as client experience director

  • Govt gives green light on bulk transfers to ‘mega funds’ as part of widespread pension reforms

  • Consultants escape regulation but providers face new disclosure hurdles: Pension Investment Review

  • Smart Pension to invest 15pc of default into private markets

Corporate Adviser

© 2017-2024 Definite Article Media Limited. Design by 71 Media Limited.

  • About
  • Advertise
  • Privacy policy
  • T&Cs
  • Contact

Follow Us

X
No Result
View All Result
  • Home
  • News
  • In Depth
  • Profile
  • Pensions
    • Auto-enrolment
    • DB
    • DC
    • Defaults
    • Investment
    • Master Trusts
    • Sipps & SSAS
    • Taxation
  • Group Risk
    • Group Life
    • Group IP
    • Group CIC
    • Mental Health
    • Rehab
    • Wellbeing
  • Healthcare
    • Musculoskeletal
    • Mental Health
    • IPT
    • Wellbeing
    • Trusts
    • Cash Plans
  • Wellbeing
    • Mental Health
    • Health & Wellbeing
    • Financial resilience
  • ESG

No Result
View All Result
  • Home
  • News
  • In Depth
  • Profile
  • Pensions
    • Auto-enrolment
    • DB
    • DC
    • Defaults
    • Investment
    • Master Trusts
    • Sipps & SSAS
    • Taxation
  • Group Risk
    • Group Life
    • Group IP
    • Group CIC
    • Mental Health
    • Rehab
    • Wellbeing
  • Healthcare
    • Musculoskeletal
    • Mental Health
    • IPT
    • Wellbeing
    • Trusts
    • Cash Plans
  • Wellbeing
    • Mental Health
    • Health & Wellbeing
    • Financial resilience
  • ESG

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.