UK’s largest DC pension fund to double private assets exposure
The UK’s largest defined contribution (DC) pension scheme is looking to double its allocation to private assets over the coming years.
Nest, a £36bn workplace pension fund, currently allocates almost 15 per cent of its portfolio to private assets.
Stephen O’Neill, head of private markets at Nest, told Reuters that the scheme sees growth opportunities in private credit, infrastructure and sustainable assets.
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The plan is to bring Nest’s exposure to private assets to “towards 30 per cent” in the next few years, Neill said.
Nest is likely to invest up to £600m in global timberland this year, with annual returns expected to range from six per cent to more than 10 per cent, he told Reuters.
Pension funds are increasingly looking at private, illiquid assets to provide higher returns and diversity away from volatile public markets.
“While bigger pension schemes were already moving to illiquid assets, the LTAF structure makes it easier,” said Joe Dabrowski, deputy director – policy at the Pensions and Lifetime Savings Association.
“It’s a package you can buy off the shelf. It creates more options, as it’s a wrapper approved by the FCA that can work with platforms.”
Read more: Canadian pension funds expand into private credit