On the go: Nest is to expand its private market holdings from 9 per cent to 15 per cent by March next year, with its investments in illiquids and infrastructure assets expected to exceed a fifth of its £13bn portfolio.
As reported by the Financial Times on Sunday, Nest currently has an allocation to private markets of around 9 per cent, including 6 per cent in private credit, and the remainder in commercial real estate.
“We believe Nest can comfortably accommodate 20 per cent or more in private/illiquid investments, from a liquidity risk perspective,” said Stephen O’Neill, Nest’s head of private markets.
“We see value in these assets for our members.”
UK private sector pension funds are under considerable political pressure to boost their investment in infrastructure, especially in light of the coronavirus pandemic, the FT report continued.
Pensions Expert has reported previously on the call, by Bank of England governor Andrew Bailey, for defined contribution schemes in particular to be conscripted into the post-pandemic rebuild of the economy.
Experts have warned, however, that regulatory hurdles must be overcome if DC pots are to invest freely in illiquid asset classes.
“We have to balance the attractive risk-return profile of these investments against their being more expensive in terms of fees,” Mr O’Neill said.
“Nest, like most UK DC schemes, operates under a very tight fee budget.”
