Illiquid courage: A new approach to balancing an illiquid portfolio
23 September 2022
Illiquid assets are an important component of many pension fund portfolios, but they come with serious risks, particularly in volatile markets.
Managing those risks requires realistic scenario analysis and a total balance sheet perspective.
Illiquid assets have become increasingly important to institutional investors and pension fund managers over the past two decades. These investors are looking for long-term, steady returns and illiquid assets – instruments like private equity, private debt, infrastructure equity and debt, real estate and natural resources, for example – can offer opportunities to
provide just that. Pension fund managers may also see illiquid assets as a means of enhancing their yields and diversifying their portfolios.
Why stocks could be in the red this year and what to do about it
It hasn’t been since 2000 and 2001 that U.S. stock markets lost money in two consecutive years, but it’s something that could potentially happen again this year. Ortec’s modelling is pointing to negative equity returns over the next 12 months as the most likely market scenario. Pension funds with tactical or dynamic allocations at their disposal may want to temper their risk and consider fixed income instead.
Ortec Finance discusses with Responsible Investor on why high-quality climate data is essential for investors to map progress toward emission reduction goals and enable a successful transition to net-zero.
The Railways Pension Scheme is one of the UK’s largest and longest established pension funds. Our client case story highlights how we’ve enabled Railpen to take a holistic view of investments across multiple asset classes through our partnership with Burgiss.