London, UK – As the global economy continues to navigate through uncertain waters, the investment landscape presents a complex mix of potential risks and opportunities for investors. David Vickers, the chief investment officer at Brunel Pension Partnership, has voiced concerns about the current economic scenario, warning that despite receding recession risks, there are other factors that could impact investors.
With around £40 billion in assets under management, Brunel Pension Partnership is one of the eight LGPS pools in the UK, and Vickers highlighted potential geopolitical conflicts and weakening economic data as substantial risks for investors. He also noted that equities are becoming more expensive, while investor compensation for investing in debt markets remains low.
In addition to these concerns, UK government plans for the LGPS pools remain uncertain, with policymakers aiming for a transition of all assets by March 2025, a move that some local authority pension funds have been slow to complete. Furthermore, the government is pushing for further consolidation of assets within the pools, with targets set for £200 billion by 2040.
Amidst these challenges, there is also pressure from the government for increased investment in unlisted assets and venture, as well as a revision of guidance for the LGPS to double its allocation to private equity to 10 per cent. Additionally, Brunel has committed to raising manager reporting duties, particularly in relation to its climate policy and responsible investing expectations.
Brunel Pension Partnership has been a trailblazer in integrating sustainability into its investment strategies, signing up to TCFD reporting in 2018 and committing to net zero in 2021. The investor has also made strides in nature risk integration, with a commitment to adopt Taskforce on Nature-related Financial Disclosures (TNFD) reporting metrics by the financial year 2025-6.
Amidst these initiatives, Brunel has reported strong performance across all listed market categories in its latest review, but has also faced challenges in active management, particularly in global equity mandates. The year also saw the organization successfully trial AI internally and strengthen access to data, highlighting its commitment to embracing technological advancements and improving data management.