During these turbulent times, if an investor's asset allocation isn't suitably calibrated, they will be found out. When the tide is in and interest rates are low, everyone floats, but when the tide goes out and returns become scarce, those swimming naked are exposed.
Claire Felgate, Head of UK & MEA Global Consultant Relations, and Dominic Byrne, Head of DC Strategy from BlackRock, argue that private markets can offer defined benefit (DB) and defined contribution (DC) schemes an appealing investment option to diversify their asset allocation.
Historically, pensions schemes have often put most of their assets into equities, but with new fund structures in place and new investment vehicles such as long-term asset funds, barriers to private market investing are falling away.
In their audiocast, Felgate and Byrne argue that over the next 18 months, there is a great opportunity for investors to build up their private market portfolio as public financing retreats and more corporates search for capital privately. In doing so, investors can diversify their asset allocation, potentially find returns, and protect themselves against inflation.
Sustainability is another crucial aspect. Themes such as decarbonisation and integrating environmental, social, and governance factors into the construction of investor portfolios is an area where private markets can make a material difference.
Diversification and asset allocation may not fully protect you from market risk.
To learn more, listen to BlackRock's audiocast: BlackRock's UK Professional Podcast Series | BlackRock
RISK: Diversification and asset allocation may not fully protect you from market risk.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.
In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.
This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.
© 2023 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.