Pension funds are facing major challenges with their investments.
Traditional portfolios alone are no longer sufficiently reliable to cover obligations or achieve targeted returns – private market investments are an interesting addition, and a possible solution for pension funds.
In the past, traditional pension fund investment portfolios looked very straightforward, with bonds and equities together with real estate providing solid returns and diversification. But times have changed – bonds have been a loss-maker in recent years, even for long-term investors, with equities generating the required returns. Despite interest-rate increases, the expected long-term yields on bonds (YTM) are unlikely to be sufficient for pension funds to meet their obligations. Common alternatives such as equities and real estate carry high fluctuation risks (equities), or are already sufficiently represented in the portfolios (real estate). Against this backdrop, does it make sense for pension funds to add private market investments to their investment portfolios in the future? There are various good reasons to do so.
“There are plenty of reasons why pension funds and private market investments create an ideal symbiosis.”
Tellco and its clients have recognised these advantages and have been operating for many years with diversified private market portfolios in various asset classes such as infrastructure, private debt and private equity through investment vehicles of institutional partners. This enables our clients to benefit from opportunities such as:
Overall, private market investments offer pension funds the opportunity to better manage the challenges of today’s investment environment, allowing for a sustainable and diversified investment strategy that meets the needs of these pension funds.