Aegon adds private markets to £12bn workplace default fund
Aegon has updated its £12bn workplace default fund to include private markets and more environmental, social and governance (ESG)-friendly investments.
The pensions and investments firm is partnering with three fund managers to improve risk-adjusted returns and provide access to a wider range of investment opportunities within its Universal Balanced Collection Fund.
BlackRock will manage a bespoke, diversified alternative private markets strategy, including private equity, private debt, real estate and infrastructure. It will also manage a fully ESG-integrated passive equities and bonds strategy with a year-on-year decarbonisation target, from the fourth quarter of 2024.
Read more: New long-term funds set to democratise private credit
Additionally, Aegon Asset Management will manage a new multi-asset credit mandate, including global high yield, asset-backed securities and emerging market debt strategies, from the second half of 2024.
It will also manage a private debt and alternative fixed income fund, subject to Financial Conduct Authority (FCA) approval, from early 2025.
And JP Morgan Asset Management will manage a bespoke strategy, offering exposure to private equity, infrastructure and forestry, also from early 2025 subject to FCA approval.
Aegon is planning to house the private market allocations within Long-Term Asset Fund (LTAF) structures, subject to regulatory approval. The LTAF is designed to make it easier for private investors to put money into long-term, illiquid assets, including private credit.
Read more: LTAFs look to diversify private markets exposure with multi-asset focus
Read more: Arcmont receives green light to launch private credit LTAF
Lorna Blyth, managing director, investment proposition, said that the changes align with Aegon’s net-zero targets, to reach net-zero greenhouse gas emissions for its full range of default funds by 2050, and a 50 per cent reduction in emissions by 2030. It also supports its aim to invest £500m in climate solutions by 2026.
“We expect many of these solutions to come from unlisted equities which aligns with our Mansion House Compact aim to invest at least five per cent of our default fund assets in unlisted equities by 2030,” she added.
“On completion of the Universal Balanced Collection changes in 2025, we anticipate that we will have moved over £30bn of default assets into funds that consider ESG factors.”
Fund administrator Carne Group will be acting as the Authorised Corporate Director of the Aegon Asset Management and JP Morgan Asset Management LTAFs.
Aegon said that the fund’s objective and risk appetite will remain unchanged. The fixed management fee will not change, although an increase to additional expenses is expected.
