Forestry will become part of the offering in early 2025
Aegon has strengthened its largest workplace pension default fund with enhanced ESG integration and private markets investment offerings.
The 700,000 members currently invested in the £12bn universal balanced collection fund will benefit from improved returns, value for money and a wider range of investment opportunities as a result of the transformation, set to take place from Q3 this year.
The fund, available to investors in Aegon's ‘Retirement Choices', ‘One Retirement' and some other platform products, will offer a bespoke solution managed by three asset managers – with private market allocations housed within long-term asset fund (LTAF) structures (subject to regulatory approval).
From the second half of this year, Aegon Asset Management will manage a multi-asset credit mandate which will include emerging market debt strategies, asset backed securities and global high yield.
The manager will also provide a private debt and alternative fixed income fund from early next year.
Also, from early 2025, a bespoke strategy which will offer private equity, infrastructure and forestry will be offered by JP Morgan Asset Management.
Carne Group will act as the authorised corporate director of the LTAFs for the above two asset managers.
In addition, from quarter 4, a bespoke, diversified alternative private markets strategy which will include private equity, private debt, real estate and infrastructure, as well as a "fully ESG integrated passive equities and bonds strategy" will be managed by BlackRock, with the latter option including a "year on year decarbonisation target".
Aegon said the fund objective and risk appetite will "remain unchanged" and its charge will include an unchanged fixed management fee, with "additional expenses" expected to increase in value.
Aegon investment proposition managing director Lorna Blyth said: We believe our changes will improve the growth potential of the universal balanced collection and future Aegon funds that utilise these enhanced capabilities. The changes target robust risk management and diversification, to offer members improved outcomes and value for money.
"This bold move also aligns with our commitment to reach net-zero greenhouse gas emissions for our full range of default funds by 2050, and to a 50% reduction in emissions by 2030. It also significantly supports our desire to invest £500m in climate solutions by 2026; investments that directly contribute to climate change mitigation and/or adaption. We expect many of these solutions to come from unlisted equities which aligns with our Mansion House Compact aim to invest at least 5% of our default fund assets in unlisted equities by 2030.
"On completion of the universal balanced collection changes in 2025, we anticipate that we will have moved over £30bn of default assets into funds that consider ESG factors."
