Panel 1: ‘Secure income:
There’s no time like the present’
Panellists, Chris Palmer; Dan Mikulskis and Ray Wright, discussed how secure income is emerging as a powerful tool for insurers and pension schemes, offering a distinctive combination of inflation protection, stable cashflows and / or impact. Here are the key takeaways:
- Rising appeal: Secure income assets are attracting institutional investors due to their inflation-linked cashflows, high risk-adjusted returns and in some cases, their impact potential.
- DB and insurers: These assets align with the long-term liabilities of DB schemes and insurers, offering long-term, stable and predictable income.
- DC potential: Secure income can also play a key role in investment strategies for DC pensions, balancing income and growth.
- LGPS opportunity: Strong funding positions and increasing cashflow pressures are driving LGPS investors to invest more in secure income, including assets that can support their impact goals on both a local and national basis.
Panel 2: ‘The growth opportunity in UK renewables’
Panellists, Rob Gardner; Mark Futyan and Raza Ali, explored the exciting investment potential in the UK’s renewable energy sector, noting that its breadth is a boon for investors seeking diversification in their portfolios. Here are the key takeaways:
- Diversification: Allocations across technologies like wind, solar and battery energy storage is crucial for mitigating risks, ensuring smoother revenue streams and enhanced resilience against market fluctuations.
- Additionality: Greenfield projects play a vital role in adding new capacity to the grid and can be accessed by investors as fully consented projects thereby reducing risk.
- No leverage: An unlevered investment strategy allows investors to mitigate financial volatility from debt, retain more control over assets and achieve stable, attractive returns.
- Natural Capital: This is a new and growing asset class that can sit alongside traditional assets in a portfolio. Nature, as an asset, can deliver economic value to investors.
Panel 3: ‘What does it mean to be an impact fund?’
Panellists, Charlotte O’Leary; Alex Jones and Maria Vaggione, unpacked how impact investing is evolving to meet both financial and societal goals. Here are the key takeaways:
- Diversification is key: Spreading investments across health, housing and education can maximise both returns and community impact.
- New frameworks: The UK’s SDR will set clearer standards for impact measurement, with Europe set to follow suit.
- Verification matters: Independent assessment can be helpful to demonstrate the authenticity of impact.
- LGPS focus: Impact funds can help the LGPS deliver pension security and positive outcomes for local communities.
