Trustees and employers overseeing the United Kingdom’s 5,000 corporate pension plans holding an estimated £1.2 trillion have another option to help manage the defined benefit assets.

TPT Retirement Solutions currently oversees around £11 billion in pension fund assets, and has launched a DB “superfund” that will invest on behalf of plans seeking to ‘run-on,’ UK pension industry parlance for well-funded schemes choosing to continue as they are, rather than opt for a so-called buy out, and sell to an insurance company.

TPT estimates assets under management in the new superfund could reach £3 billion in five years. Under its model, TPT would ultimately share investment profits with beneficiaries and would invest in growth assets, in line with the government’s ambitions to get pension funds to invest more in UK productive assets.

Currently, many of the UK’s DB funds, often in their end game as their corporate sponsor prepare to shift its liabilities off balance sheet, aren’t positioned to tie up assets in illiquid investments.

“There will be an emphasis on private markets and deploying capital in a manner that aligns with the UK government’s current thinking, we believe,” says Nicholas Clapp, chief commercial officer of TPT, speaking to Top1000funds.com. “Our structure means we will be able to have a long-term horizon and support illiquidity, and we will also be able to create an internal market from one client to another, and from one solution to another. This investment philosophy is already at the heart of what we want to do.”

He adds that the latest solution on offer from TPT reflects the organisation’s commitment to offer a range of consolidation options to the UK pension market.

“We believe this is another compelling option and will encourage UK pension funds to consider TPT as one of their consolidation options – we offer a different type of opportunity and skill set to deliver on behalf of DB pension schemes.”

Overtime, the superfund will achieve synergies and efficiencies by merging vintages of client DB funds”, Clapp continues. Schemes within the superfund will have access to seven different fund structures in a fund of fund vehicle enabling them to access numerous managers. From this they will be able to create an asset mix shaped by their maturity, risk appetite and investment objectives.

He says the fees will be specific to each deal, but notes TPT is experienced at running solutions that offer value for money and use scale to create operational efficiency. “We can do everything in house; we have the skill set, pipework and plumbing between different services like actuarial, administration and fiduciary management.”

TPT will submit its proposal to the pensions regulator for assessment in January. So far, only one other superfund, Clara Pensions, has passed regulatory scrutiny and Clapp believes the superfund market is large enough to accommodate different varieties of superfund, and not be homogenous. “When you look through the lens of risk, we present a different type of skills set to deliver DB pension schemes, and our track record speaks to itself.”

Still, he says that positive feedback has primarily come from consultants rather than corporate pension funds themselves.

Moreover, take up of superfunds by the DB pension community has been historically slow. The sharp rise in interest rates in 2022 improved the funding levels of many DB schemes and by 2024, many funds were close enough to 100 per cent funded to be sold to an insurer.

But TPT hopes it offers a compelling selling point. It will allow pension schemes in the superfund to use the surplus for member augmentations in an approach Clapp believes will be both “interesting and appealing” to a wide variety of funds.

However, this will only happen when TPT’s seed investor is repaid.

UK regulations require all DB funds entering the super fund are fully funded on a buy out basis whereby the pension scheme has enough assets to transfer all of its liabilities to an insurance company which then takes over paying members’ pensions. This meant TPT’s required finding a seed investor to take on the role of the sponsor, ensuring the pension funds are fully funded.

“Once our seed investor has earned their investment back, members should get the majority of the surplus,” he concludes. “Our strategy allows members to enhance benefits more than they would normally which will be an alternative to consider for ceding sponsors and trustees.”

The chief investment officer of the $150 billion Minnesota State Board of Investment has the power to hire and fire managers without board approval for the first time, in a governance overhaul approved this week that will significantly speed up its decision-making process. 

Presenting the proposed governance change to the board this week, executive director and chief investment officer Jill Schurtz said the velocity of investment decision-making has “accelerated meaningfully” – especially around co-investment opportunities and continuation vehicles – and is out of pace with the quarterly board meeting cadence.  

“This would be an important enhancement for efficient decision-making, and in particular facilitating our ability to take advantage of attractive opportunities as well as favourable economics,” she told the board meeting.  

Under the new investment policy statement (IPS), which the board approved, the CIO now has the authority to hire and terminate investment managers in public assets at her discretion.  

In private markets, the CIO will be able to make commitments of up to $750 million per fund, secondaries and co-investment vehicles, plus up to 1 per cent of such commitments to cover any required costs at closing. She can also make direct co-investments alongside commingled funds in which the SBI has existing commitments, for an amount no greater than the primary commitment or $500 million.  

The old process of hiring new managers required SBI investment staff to interview shortlisted organisations and submit finalists to its 17-member investment advisory council (IAC), comprising public sector, finance, employee, and retiree representatives. The IAC’s recommendations then required board approvals before the staff could contract an external manager.  

Under the new IPS, the board retains the ultimate say in policy decisions such as asset allocation, the ability to modify or revoke delegated authority to the CIO, as well as the appointment and termination of the CIO.  

Schurtz said the move to delegate investment authority will align SBI with industry best practice.  

“It’s not just pension plans that have moved to this model far and wide, but as well it’s universities, foundations, endowments and family offices. This is seen as an important feature of a well-performing plan,” she said.  

In what would be one of the final rounds of commitments under the old governance structure, the board approved eight private equity, one private credit, one real estate and one real assets fund – the largest mandate being an injection of up to $300 million into a Blackstone private equity fund.  

Portfolio finetuning 

SBI investment staff also presented the results of its five-yearly asset allocation study, conducted over the past 18 months with external consultant Aon.   

It led to the decision to reduce the cash allocation from 5 to 3 per cent, shifting the capital to core and core plus bonds as well as “return-seeking” income in a slight increase to risk. The fund will also focus on shorter maturity securities in its Treasury protection portfolio to lower interest rate sensitivity and improve stress-period liquidity.  

In a bid to have better control of diversification in private markets and understand the underlying exposure, SBI introduced sub-asset class weightings which saw private equity occupy the lion’s share of private assets with an 18 per cent of total fund allocation.  

SBI investment staff said in a meeting memo that it has “compelling reasons” to believe the asset class’s return premium relative to public markets will persist, but perhaps at a lower level due to increased competition for deal flow.  

The fund will also target a 3 per cent allocation in private credit, and 2 per cent each in real estate and real assets. The return target for the private markets’ asset class will be a composite of sub-asset class benchmarks weighted by their market values.  

Domestic equities and international equities’ target allocations remain unchanged (33.5 per cent and 16.5 per cent respectively). 

“Overall, the proposed changes move the portfolio in a positive direction and reflect important enhancements to portfolio implementation,” said deputy CIO Erol Sonderegger, adding that the changes have a modest impact on expected return and volatility.  

“The recommendations from the study reflect incremental changes focused more on improving portfolio execution than on proposing large changes to asset class weightings.” 

The board meeting was held virtually as pro-Palestinian protests were organised in front of the SBI building, with demonstrators demanding that the agency divest from Israel bonds over the country’s role in the ongoing Gaza war. Some advocates spoke during the public comment period, but the board did not make any official comment regarding the exposure. 

London-based £26.5 billion ($35.3 billion) LPPI, one of the smallest Local Government Pension Scheme pools, has emerged as one of the big winners in the UK government’s drive to reduce the number of LGPS pools which collectively manage £392 billion ($522 billion).

Drawing on inspiration from the Canadian model, Chancellor Rachel Reeves has driven policy to reduce the number of pools from eight to six in a bid to boost efficiency and scale, and enable big-ticket investment in the UK economy.

LPPI stands to scoop up an estimated £19 billion ($25 billion) of additional assets from five local authority schemes forced to find a new asset manager after sister pool Brunel Pension Partnership failed to win government approval under Reeves’ ‘Fit for the Future’ criteria.

Leeds-based £65 billion ($86.7 billion) Border to Coast is another winner, with its assets likely to swell to £110 billion ($146 billion) as it welcomes an additional seven partner funds (to make a total of 18) from the other disbanded pool, ACCESS.

Assets under management at LGPS Central, which will also take on assets from ACCESS and Brunel, are forecast to rise to £100 billion ($133 billion).

“Our partnership will be strengthened by the addition of these funds. In coming together, we can use our scale to be more effective, more resilient, and more impactful. Together we will build on our collective strengths and continue to make a difference for the LGPS,” said Rachel Elwell, Border to Coast’s chief executive officer.

cost concerns emerge again

In recently published minutes from its September board meeting, councillors at the £6 billion ($8 billion) Avon Pension Fund moving from Brunel to LPPI, shared their concerns that “there will be material one-off costs incurred in closing down Brunel and moving the fund’s assets into the new joint pool, which should be mitigated over time by lower ongoing costs.”

The minutes also revealed that Avon believed both LGPS Central and LPPI would be “excellent pool partners” and “both pools score very similarly on the majority of criteria”.

Councillors voiced their appreciation for Brunel’s expertise in private markets, climate strategy and responsible investments, and said it was important for all Brunel funds to depart simultaneously, regardless of their pool destination, to share the burden of exiting Brunel in an orderly way in a process that will take 18-24 months.

Separately, the £4 billion ($5.3 billion) Dorset County Pension Fund also stated its reasons for moving to LPPI.

“This is a positive step towards securing the long-term sustainability of the Dorset County Pension Fund. LPPI is a well-established, well-regulated investment pool with a strong track record of performance, advice, responsible investment and collaboration, and we are confident that this new partnership will deliver long-term benefits for our scheme members, their employers and the wider community,” said vice-chair Councillor Andy Todd in a statement.

The £3 billion ($4 billion) Somerset Pension Fund, another of Brunel’s former partners joining LPPI, voiced its disappointment that the government did not believe Brunel could meet its ambitions, and that Brunel funds would have to seek new pools.

“The Pension Fund Committee and officers of the Somerset Fund, and the other nine funds involved, had worked very hard to build Brunel into a successful pool and transition in excess of 95 per cent of our fund’s investments to Brunel.  It feels much of this effort has now been wasted and we have to start our pooling journey again,” said pension fund committee chair, councillor Simon Coles.

Governance and legal work to bring the funds into their new pools is set to be completed by 31 March 2026.

In another development, the Wales Pension Partnership Investment Management Company (WPP IM Co) set up to manage the £25 billion ($33 billion) assets of Wales’s eight local government pension schemes representing 412,000 members, has just appointed its first chief executive, Rob Lamb.

Calling WPP a once-in-a-generation opportunity to create a standalone, regulated investment company in Wales that will benefit all stakeholders Lamb said WPP IM Co will invest to “promote economic growth, create jobs, support clean energy, and enhance infrastructure for the benefit of everyone in Wales.”

Writing on LinkedIn, Lamb said the company’s purpose goes beyond protecting pensions.

“We’re building an institution that reflects Welsh ambition, invests responsibly, and creates lasting economic, social, and environmental impact,” he says.

*Chief investment officer of LPPI Richard Tomlinson and chief investment officer of Border to Coast Joe McDonnell will be speaking at the Fiduciary Investors Symposium Oxford between November 4-6, 2025. Register here today.

Fordham University’s $1.1 billion endowment is culling real estate and private credit in favour of higher venture capital and growth equity allocations as the fund looks to juice up performance. 

With an annual spending rate of 4.5 per cent and an ambition to reach $2 billion in assets “as soon as possible”, chief investment officer Geeta Kapadia concedes that the endowment “really needs return” and must lean into risks.  

The portfolio is underpinned by a significant chunk in private equity (31 per cent) and more moderate exposures to real assets (16 per cent) and private credit (7 per cent), according to financial reports as at June 2024. The private markets allocations are at similar levels now, Kapadia says, although she declines to disclose more recent figures. 

“We’re blessed with the ability to take longevity risk, so we should use it to our advantage and be willing to lock up our capital for the chance of earning more return,” she says in an interview with Top1000funds.com in Singapore.  

“Real estate and private credit – that’s just not going to be able to provide us with the return that we need [compared to venture and growth equity].” 

Kapadia also has reservations about private credit as an asset class. The fund’s current allocation consists of core private credit funds with some non-US strategies, which Kapadia mostly inherited from the previous CIO.  

“I’ve never been a huge fan of private credit even way back. Particularly given the change in interest rates, private credit managers’ ability to just financially engineer solutions [is made less likely] by the cost of capital,” Kapadia says. 

The speed at which capital is flowing into private credit has slowed down globally: fundraising activity this year is on track to fall 30 per cent short of the 2024 level ($219.2 billion) and hit the lowest number of funds closed in over a decade, according to PitchBook. 

“The end to that era of free money is truly changing the landscape of private credit managers’ ability to do really well, so if those returns compress and the cost of debt increases, I have a hard time identifying why I want to put more money to work there,” she says.  

“The fees are not as high as private equity, but they’re still high. I would rather pay the fees in private equity and make returns there than lock my money up in private credit.” 

Tight roster 

Kapadia joined the Fordham endowment after a 13-year tenure as assistant treasurer and investment director at Yale New Haven Health, the largest healthcare system in Connecticut. Three years since taking over the university’s top investment job, Kapadia made her mark by condensing the manager roster from 50 or so names to 30-40 – a sweet spot, she says, for the fund’s current size.  

With only five people in the investment team, the fund wants to develop deeper relationships and demonstrate its commitment by handing over more capital to partners it has high conviction in, “as opposed to spreading it far and wide and hoping that some of them will rise to the top”. 

“Maybe when we’re $3 billion. We may have a different conversation, but we don’t see the reason to really expand,” she says, adding that its manager appointments are driven by bottom-up views rather than a top-down quota.  

“I remember long ago, when I was working at my former institution, one of our board members said ‘I’m not going to put money in my 70th best idea, because that’s not a winning strategy for us’. 

“We would much rather have one manager that we feel real conviction about and give them more money than hire three managers and give them only a third of that same dollar amount. For us, it’s a sheer numbers game.” 

Kapadia is generally “not a huge fan of buying a bunch of strategies” but its absolute return hedge fund book, which represented almost 18 per cent of the total portfolio in the June 2024 disclosure, is somewhat of an exception.  

The portfolio is tasked with mitigating potential downturn in equities and is a diversifying return source. While the capital is still tightly allocated to a small group of managers, they represent a wide array of strategies – Kapadia is keen to explore more event-driven and macro opportunities to take advantage of big picture economic developments, but less so for long/short where the fund already has significant European and US exposures.  

It’s important to the fund that the manager stays in its lane, and there are no sudden changes in investment strategy. Transparency and communication are also critical, and she says investor relations staff hindering access to portfolio managers or simply not returning calls are instant red flags.  

“We want to get married to these managers, like we want to really feel like we have a relationship,” she says.  

Kapadia flags that the endowment will conduct a more careful evaluation of private markets manager relationships too. As the exit environment continues to look depressed, she expects investors like herself to be more scrutinising when deploying capital in the space.  

“The fact is that funds keep extending their terms, distributions are at an all-time low, and the terms are not becoming more friendly to us yet. From the LP’s perspective, we’re being asked a lot,” she says.  

“I do think that long-term, we have to have a significant amount of exposure [in private markets]. But over the shorter to medium term, there’s going to be some sort of reassessment of our landscape, the opportunity set, and the managers that we want to partner with. 

“It’s not just putting a bunch of money to work and it should be okay. You have to be much more selective and much more discerning about where you’re going to go.” 

Resilience has become the buzzword of our time. Literally, it’s ubiquitous, it’s everywhere. The French language has a less cerebral word for it – resilience is a passe-partout; it works well in every context.

The Latin resilire means “to bounce back,” and it’s no surprise that with the advent of industrialisation in the early 1800s, it came to denote the elasticity or power of materials to return to their original shape after being stressed (“bend, don’t break”).

It remained confined to materials science for a while, entering psychology (to mean thriving despite challenges) only by the mid-1900s. By the 2000s, its evocative meaning had spread far and wide across various disciplines and contexts. The concept’s diffusion has grown tenfold since 2004, according to Google Trends.

Trend in Google Searches for “resilience” (2004-2025)

There are likely many reasons behind the rise in interest in the concept. To us, one reason is particularly compelling because it provides a coherent macro picture: the system has become increasingly complex. Resilience, at its core, has a very defensive-reactive connotation and in a more complex world – with unprecedented pressure exerted on planet Earth – it makes perfect sense for humans to think about how to ‘bounce back’ from potential shocks ahead.

But there is no bouncing-back in the Anthropocene

We humans have become the dominant force shaping the planet, even to the point of outgrowing the biosphere [1]. We have grown so much that the emergent complexity is:

  • eroding our agency, and
  • amplifying systemic risk.

Consider perhaps the most systemic example – we feel increasingly vulnerable to climate change while simultaneously incapable of delivering the urgently needed reduction in global GHG emissions. We can recognise and verbalise what’s needed but struggle to enact it within the system.

So why are we struggling to enact the change that is needed? Either, because we believe the damage will not be so severe as to justify the cost of change. Or, because we believe our current system is resilient enough – sure, it will take some damage but we will change and adapt as we need to.

However science is warning us of irreversible tipping points and non-linear ripple effects within the broader ecosystem. In simple language, we may soon forget about the stable, normal (climate) state we thrived in.

Now, where are we expecting to bounce back from, or to, if irreversible states open out in front of us?

The concept of resilience assumes the recovery to some equilibrium trajectory or steady state at least, but climate change is a mean aversion process: “there is no mean, there is no average, there is no return to normal. It’s one way into the unknown”[2]. That’s definitely not an adaptable environment, let alone one where we could build an even better ‘bounced-back’ version of our system.

If it can’t be about recovery, it must be about transformation

Pointing to resilience in response to systemic risk means hoping for a mild systemic outcome – an inconvenient disruption while we repair the system. By implication, it means we are choosing to ignore the systemic outcomes which irreversibly break our system. And that means we are abdicating from the type of change we need – transformational or systemic change; in other words, at a minimum, abandoning our current economic system for a different one.

Resilience reveals unwavering faith in business as usual. We admit the ‘usual’ might be patched up here and there (eg leaving fossil fuels in the ground and going with wind and sunlight), but we don’t believe it needs to undergo any real test of transformation. It’s like anticipating potholes ahead, pulling over the car and replacing the tires and suspension, then getting back on the road – confident we’ll bounce our way through. But what if there’s no road left whatsoever to take us home? What if the only way forward is to rethink – or even entirely transform or ditch – our mode of transport?

As noted, resilience as a palatable concept has entered every imaginable human context, expanding our perceived capacity for determination and endurance in the face of adversity. The risk is that we forget that there is only one ultimate level of resilience that matters – planet Earth’s resilience.

What do we make of our cherished human resilience when one of the most internationally recognised scientists on global sustainability tells us that Earth is losing resilience?[3] Consider accelerating warming trends, record-breaking temperatures, unexpected anomalies, a potential shift in climate sensitivity, reductions in aerosol emissions, etc.

Resilience appears to be the quintessential form of adaptation when mitigation has failed. In other words, we will continue to tell each other about the greatness of human resilience so much that it will be the only strategy left to cope with climate change/systemic risk. But because recovery and adaptation without mitigation (a pillar of systems change) is doubtful at best, it will likely turn out to be an empty box in the face of a collapsing system.

Systems change demands the opposite: “break, don’t bend” 

Let me wrap up with a play on words – for business as usual to continue, we need to bend without breaking. In this piece, I argued that the destabilisation caused by human activity on this planet, and the resulting climate change, leaves no room for bouncing back. Now, if we are to bend but not bounce, it likely means the bending will continue until we break – and that’s not what we want.

What we might actually want is to reasonably ditch business as usual and any tool that faithfully supports it, including the concept of resilience. We may want to break from business as usual and no longer compromise (bend) with a system that doesn’t work.

A system that simultaneously empowers and imperils us

I recently wrote about the Jevons paradox – or what I referred to as the “efficiency trap” – as an example of the double-edged dynamics that populate complex systems[4]. Similarly, human adaptability increasingly carries the seed of its own undoing. The following quote from Christopher Hitchens provocatively captures this idea: “We are an adaptable species and this adaptability has enabled us to survive. However, adaptability can also constitute a threat; we may become habituated to certain dangers and fail to recognize them until it’s too late”.

Andrea Caloisi is a researcher at the Thinking Ahead Institute at WTW, an innovation network of asset owners and asset managers committed to mobilising capital for a sustainable future.

[1] Human CO2 emissions weigh more than the biosphere and built mass (Global Carbon Project, Elhacham et al 2020)

[2] Mark Blyth, “There is no ‘getting back to normal’ with climate breakdown,” The Guardian, August 11, 2021

[3] Johan Rockstrom, Is the Earth losing resilience, and does it matter?, April 1 2025

[4] The efficiency trap

“Investors used to view their allocations to sovereign debt as rock solid, but growing risk now takes up a lot of our head space,” says Charlotte Vincent, co-head of fixed income at the United Kingdom’s £36 billion ($48 billion) master trust the People’s Pension, which has just under £2 billion ($2.6 billion) allocated to UK and US sovereign debt in its £9 billion ($12 billion) fixed income portfolio.

Three years after former UK premier Liz Truss’s budget catastrophically misjudged demand for her government’s debt, causing gilt yields to spike across maturities and forcing thousands of UK pension funds with LDI strategies to fire sell assets such as bonds and equities to meet collateral calls from banking counterparties, Vincent says the long shadow of the crisis remains.

The People’s Pension doesn’t have an LDI strategy but she is concerned about bond market volatility as the government continues to struggle to balance the books.

It’s still relatively straightforward for investors to forecast moves in the short end, referencing the part of the yield curve that plots interest rates over time and refers to bonds with maturities ranging from 1-3 years.

“The Federal Reserve and the Bank of England effectively control short-term market moves via their base rate policy,” she tells Top1000funds.com in an interview. 

However, policymakers have less control over the long end which is subject to ongoing negative pressure, amongst which rising budget deficits is a growing source of volatility as well as long-term fiscal pressure like demographics.

In another negative trend, UK pension fund demand for long-dated bonds which has defined the market for decades is also shifting with the gradual move from defined benefits to defined contribution pension systems, creating less demand for the long end.

“Governments need demand for longer dated debt but there are fewer natural buyers. This is creating bear steepening at the long end – it’s gone up considerably and we are closely monitoring it,” says Vincent.

That monitoring has included creating more optionality to allow the investor to adjust the allocation between short-dated and longer-dated US treasuries and gilts, even though it is a passive strategy.

“We position ourselves within UK gilts and US treasuries to ensure we can move away from the long end if we think there are too many pressures, and then move back in. It is a constant discussion. We have given ourselves optionality so that even though it is a passive allocation tracking the index, we have set it out into maturity buckets.”

The Office of Budget Responsibility (OBR), a UK fiscal watchdog, projects that UK pension fund ownership of gilts will fall from 29.5 per cent of GDP in 2024-25 to 10.9 per cent in the early 2070s. The OBR estimates that private sector DB pension schemes, which are closed to either new entrants or further accruals, collectively own around £556 billion ($745 billion) of gilts, but as the members of these schemes retire or die in the coming years, these pension funds will liquidate their holdings.

And DC pension funds like the People’s Pension won’t be taking up the slack. Although the size of the country’s DC funds are projected to grow, they are unlikely to plough more into gilts and not enough to offset bond sales by DB funds.

For example, Vincent says the most likely fixed income allocation to grow at the People’s Pension is high yield and emerging market debt – currently at 5-10 per cent of the allocation – at the expense of sovereign debt.

“We are currently conservatively positioned in high-yield and emerging market debt, which are fully active parts of our portfolio. At present, we’re not seeing the right entry points, but these areas are under regular review and we could shift to a more risk-on position if the right opportunities arise,” she says.

“If we do make changes, we’d most likely go to trustees to increase high yield and emerging markets and reduce the sovereign allocation.”

The OBR has also warned that the UK government will need to pay a higher interest rate to draw more buyers like domestic DC funds and overseas investors into the UK gilt market if the DB pension sector’s holdings drop away.

Vincent acknowledges that reduced pension fund demand for long dated gilts could mean higher yields for investors, but she says the volatility is still an issue. “Everything has a price and as the long end moves, prices can become attractive. But right now the long end is in a state of  flux, and this is where it becomes an issue for investors.”

Invesco manages the entire fixed income portfolio, and the fund has no plans to add managers yet. Vincent says the sole manager risk isn’t an issue because the People’s Pension only accounts for a small percentage of Invesco’s total assets under management of $2 trillion. Still, the pension fund receives an estimated £4.2 billion ($5.6 billion) in annual contributions and as its AUM grows, new satellite fixed income managers could be added over time. 

“We could get to the point where we are too big for one manager, so we will keep an eye on it.”

Historical tights

The largest part of the fund’s fixed income allocation (65 per cent) is invested in investment-grade credit in a semi-active strategy that seeks “to avoid the losers” in a buy and maintain approach. Vincent explains that this allocation is currently conservatively positioned because strong technical indicators in corporate bonds continue to drive “massive demand,” putting pressure on spreads.

“We are seeing tights we haven’t seen since 1997 – they are in the top percentile across the board,” she says. “The trajectory of rates is heading down so investors are locking in returns now. The market is priced to perfection.”

Investment grade is split into European, US and UK corporate bonds with different maturity buckets, allowing the manager to shift between geographies and duration in a strategy that aims to strike a balance between being strategic and also enabling any opportunity to change those allocations.

Corporates want to talk about responsible investment

The portfolio is fully hedged and has a net zero overlay that includes a bespoke engagement solution with Invesco.

She concludes that responsible investment is now a key seam to strategy.

“Engagement in fixed income is growing, with managers working alongside corporate ESG teams to achieve the best outcomes. To ensure consistency of message, asset managers are increasingly bringing credit, equity, and responsible investment analysts to meetings with corporates,” she says. 

“As fixed income investors, we find corporates want to engage with us because we own their debt, and asset managers are able to clearly explain and express their investors’ priorities, helping to bring alignment. For example, we have an exclusion policy and net zero alignment across our investment-grade portfolio.”