Many pensions avoid private investments out of fear that long-term capital lockups could elevate liquidity risk. This paper aims to help pension executives better understand how data can enable their effective use of private investments and discusses how new investment policy approaches may help to take advantage of market opportunities.
Today’s defined contribution plan participants desire—and deserve—institutional-quality investment management, including the diverse selection, robust due diligence, and potential returns that this classification implies.
Plan sponsors are strategizing for growth and managing risk in a significantly different investment environment. To accomplish their goals, it is imperative that these changes be taken into consideration. By taking a fresh look at their investment strategies and plan management, organizations have an opportunity to adapt, evolve, and reap significant benefits.
Many defined benefit (DB) plan sponsors have concerns that the longer-term lockups required for private investments (PI) preclude them from taking advantage of this asset class. However, an exemption exists that allows ERISA-governed DB plans to transfer their PI programs to a separate investment pool if they need to—without liquidating them or sacrificing returns.
We believe insurance-linked securities can be a good fit for many pension funds looking to diversify their portfolios. This paper shares insights on how pensions can confidently underwrite and implement this asset class.
Banking sector challenges have helped to establish private lenders as main sources of capital to mid-market and large companies and created a range of private credit investment opportunities for pension plan sponsors, which requires thoughtful portfolio construction when implementing these strategies in an uncertain market environment.
Private credit strategies such as private direct lending funds and public business development companies have become popular among pension plan sponsors seeking yield enhancement over their public fixed income allocations. Understanding the key characteristics of both will better enable them to choose the best fit for their plan.
By changing the PPA discount rate methodology to the Full Yield Curve approach, ERISA-covered US single-employer pension plans can significantly decrease or eliminate their variable rate premiums, reduce complexity, and simplify the risk management process.
Over the years, as institutional investors have implemented newer and more dynamic private markets strategies in their portfolios in an effort to boost investment returns, they have also faced a timing conundrum. Secondaries have the potential to help address this challenge. We review their potential advantages and show how they can be broadly used as an effective portfolio management tool for investors of all types and sizes.
The private equity secondary market can offer investors efficiency and access that is unavailable elsewhere in the private investment universe. We believe partnering with a knowledgeable and experienced investment team is an important part of finding success within this dynamic and evolving asset class, and we answer seven key questions reviewing private equity secondary funds and their benefits.