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.
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