How Partners Group is cracking the DC pension scheme market
Jul 24, 2024
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Joanna Asfour discusses how private equity can benefit DC pensioners in the UK, focusing on LTAFs as a solution. The podcast explores the challenges trustees face in accessing private markets and the role of pension fund trustees. It also analyzes the influence of evergreen vehicles on performance fees and the evolution of the DC pension scheme market towards daily valuations and global diversification.
Partners Group pioneers democratization of private equity for individual investors.
Defined contribution pension schemes seek inclusivity in accessing private markets like LTAFs in the UK.
Deep dives
The Evolution of Democratization in Private Market Investments
Private market investments have transformed over the years, with democratization becoming a key focus. Partners Group, a pioneer in this domain since the early 2000s, views democratization as broadening access beyond institutional investors to individuals. This shift aims to provide a diverse range of investment opportunities, advocating for a more inclusive investor base that goes beyond traditional sovereign wealth funds and institutional investors.
Client Segmentation in Access to Private Markets
Access to private equity and similar market segments is undergoing a shift towards inclusivity through client segmentation. Institutional investors have long been participants, while high net worth individuals access these markets through private banks. However, smaller wealth management firms face limitations in providing diversified access. Initiatives like defined contribution pension schemes seek to extend private market access to individual investors, promoting a more inclusive investment landscape.
Challenges and Solutions in Private Market Accessibility for DC Pension Schemes
For defined contribution (DC) pension schemes, entering private markets presents complexities such as limited fund structures and operational considerations. Regulatory approval, like the Long-Term Asset Fund (LTAF) structure in the UK, aims to facilitate private market accessibility. LTAFs offer a simplified investment structure, requiring trustees to carefully assess liquidity management and operational intricacies while emphasizing the importance of fair performance fee structures.
Shifting Focus from Cost to Value in Private Market Investments
There is a growing emphasis on shifting the focus from cost-centric approaches to value-driven strategies in private market investments. The industry is transitioning towards highlighting the benefits of private markets, such as portfolio diversification and long-term outperformance, over merely cost considerations. Initiatives like the Value for Money framework and regulatory support aim to encourage trustees to prioritize value creation for pensioners through private market allocations.
Founded in mid-1990s, Partners Group launched its first vehicle accessible to individual investors in the early naughties. Today it is at the frontline of the democratisation of private equity.
In this episode, Ross Butler speaks to Joanna Asfour, the firm's managing director of client solutions, to discuss how private equity can help DC pensioners in the UK access private markets.
We look particularly at LTAFs, the UK equivalent of ELTIFs and the various nuances of providing relatively simple access to the asset class for DC pension trustees, which can often require the involvement of life insurance platforms and master trusts.