By David G. Barry
Local government pension schemes in England and Wales appear
poised to increase their allocations to private markets.
Alpha Real Capital surveyed 100 LGPSs in April and
found that 91% expect over the next five years to increase their allocation to
the investment segment, with the majority – 60% – expecting allocations to rise
by between 5% and 10%. In a 2021 study of 100 U.K. professional pension fund
investors, more than half said they allocated up to 25% to illiquid assets as
part of their investment strategy.
The pension schemes, according to the study, are showing greater interest in
private markets because of the greater transparency around the asset class, the
increased opportunities to deploy capital and a desire to diversify their
portfolios.
In a statement, Boris Mikhailov, Real Alpha’s head of client solutions,
said, “private markets, and in particular secure income real assets, are
growing in popularity amongst LGPS Funds as they offer the potential to provide
secure, inflation-linked cashflows to help meet liabilities in an inflationary
environment. It is also important to note that secure income real assets like
social or renewable infrastructure have quantifiable and measurable ESG
benefits. It is possible to invest in these assets to help with ‘E’ or ‘S’ in
ESG without sacrificing much needed investment performance.”
Alpha Real is a specialist real assets investment manager focused on secure
income strategies and invests in U.K. and European assets. It has £4.7
billion (US$5.68 billion) under
management.
