NEST advances into private markets as AUM reach £30bn

NEST, the UK’s largest pension scheme by members, is evolving its investment strategy by moving into private markets to drive investment growth, while public markets remain turbulent.

More than 15% of NEST’s portfolio is now allocated to private assets, with 45% of these assets based in the UK. The scheme recently added landmark properties in Liverpool and London to its portfolio of private assets holdings.

NEST has also confirmed that it reached a new landmark of £30bn (€34bn) of assets under management (AUM). Since 2019, the scheme’s investments have increased by five times.

It has been 11 years since NEST’s first contribution (£19) was made. Over the past decade, NEST has grown to become the largest UK scheme by members and is on target to have £100bn AUM by the end of the next decade, according to the pension scheme.

NEST said it has now invested around £5bn into property, private credit, unlisted infrastructure, and private equity, representing more than 15% of the total portfolio.

Liz Fernando, NEST’s chief investment officer, said: “To hit £30bn is a fantastic achievement. 12 years ago, NEST needed an investment framework in place that could rapidly grow as we supported millions of people to save for their pension, many for the first time. The award-winning, sophisticated investment strategy NEST has in place today is testament to the hard work that’s gone before.

“It’s important that schemes diversify – it’s a challenging time for investors and we’ve needed to find new ways to drive growth.

“We continue to diversify into private assets such as property and private equity. These assets can produce long-term, strong growth and give us access to unique opportunities we can’t reach through public markets.

“We’ve recently invested in some hugely exciting property assets right here in the UK, including the India Buildings in Liverpool and Sanctuary Buildings in London. Both should help boost the pension pots of our members for many years to come.”

Rob Codling, Legal & General Investment Management (LGIM) fund manager for real assets, which has partnered with NEST over the past 10 years, said: “[This partnership] has been a privilege thanks to our shared investment values, NEST’s commitment from the outset to ESG and their continual engagement with us on the mandate. Working together we strive to deliver strong long-term property returns for pension scheme members, whilst taking a sustainable approach to improve the built environment and their local communities.

“Real estate offers compelling long-term risk-adjusted performance when viewed against other asset classes. The range of investment styles within the asset class also provides additional diversification opportunities.

“As we transition to a low carbon world, we recognise that the sector has a pivotal role to play in ensuring we meet global commitments to decarbonisation. We believe that this focus on value creation, growth and doing the best for future generations, will see huge benefits for NEST’s 12 million plus members.”

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