In a difficult 2022, global stocks and bonds had negative returns for the second quarter in a row. Higher inflation and interest rates and concerns for possible recessions around the globe have been on investors’ minds as well as the continuing conflict in Ukraine and its supply chain effects.
However, as we always say, members should focus on long-term returns. There will be bumps on the road but Nest’s award-winning investment strategy is built around the advantages of a well-diversified portfolio, invested responsibly. Our approach has been designed to cope with volatility and still deliver good long-term returns. Further sophistication is being built into our approach by the inclusion of investing in private markets – debt and equity.
The appointment of Schroders Capital to manage our private equity investments earlier this year is something Nest’s CIO Mark Fawcett said could be viewed as a “watershed moment”. Nest has made these investments accessible for DC pension scheme members who haven’t had this option previously. The press release can be found here – Private equity investment now available for millions of UK workers | Nest pensions
We are proud to be working with organisations who carry out our investment strategy by managing our trades in a way which follows our investment goals and beliefs, and Schroders are a great example of this, being recognised as responsible investors.
Additionally, we recently appointed HarbourVest, another established global asset manager, with an impressive performance record in the industry, who align with Nests approach to responsible investment, as a Carbon Neutral company who set high expectations for their managers and investors. The press release can be found here – Private equity investment now available for millions of UK workers | Nest pensions
Craig Mitchell, an economist at Nest, provides more insight around our decision to increase our allocations in private markets, in the article recently published by portfolio institutional – Nest on private equity: Unlocking growth
Diversification of assets means we have exposure to assets and regions which are influenced by different factors, as such the risk they will all deteriorate at the same time is less. Illiquid assets are less volatile than listed markets in the short term and infrastructure and renewables in particular tend to be very stable assets. Adding these to our portfolio has further improved our portfolio resilience.
It’s certainly been another difficult quarter and we continue to carefully monitor the risks; we remain confident our strategy will continue to deliver returns over the long term.
Nest continues to excel and this has been recognised the experts at Defaqto yet again, who have awarded us a five-star rating for the fifth year in a row, acknowledging Nest as one of the leading workplace pension schemes in the UK. Similarly, we’ve just been awarded Best Investment Strategy in the European Pension Awards, please see here – Winners 2022 // European Pensions Awards
Furthermore, Nest won for the fourth consecutive year, the Corporate Adviser award in the Ultimate Default Fund category, 2022 and was highly commended in Best Master Trust and Best Default ESG Strategy categories.
Considering these successes and despite the challenging financial markets we continue to deliver some of the best risk-adjusted returns available in the market. In other words, we take much less risk than most other pension schemes and providers and our highly sophisticated investment strategy still provides returns which are in line with market averages, as demonstrated in the Q2 capa data, please see below. Our team of experts understand most members do not want to take high levels of investment risk with their money and would much rather see steady returns over the long term.
The value of investments may go down as well as up and the return of your investment is not guaranteed. Fluctuations in financial markets, currencies and other risks may cause fluctuations in the value of investments. Any fund objective or target should not be considered as guarantee of performance of any fund. Derivatives may also be used for efficient portfolio management purpose.
This article does not constitute advice on whether to invest in these funds. Neither this article nor any data contained within this article is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. You may wish to consult with an appropriately qualified financial adviser in relation to your investments and any change to them.
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