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UK pension schemes to increase allocation to illiquid assets

pension_investmentMany UK professional pension fund investors are set to increase their allocation to illiquid assets over the next three years, research suggests.

A study by Alpha Real Capital found that some 85% of pension schemes will invest more in illiquid assets, while 7% expect a “significant” rise.

Out of 100 schemes surveyed, many already have substantial allocations to illiquid assets, according to the report.

Nearly 60% of respondents said their scheme already allocates up to 25% to illiquid assets as part of their investment strategy.

Meanwhile, nearly two out of five said they allocate up to 10% of their portfolio to illiquid assets, while just 2% have no allocation to illiquid assets at all.

Shajahan Alam, CDI director at Alpha Real Capital, said: “Pension funds are increasingly looking for certainty of returns through contractual cashflows, higher yields and portfolio diversification.  This means growing allocations to illiquid assets.”

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