The perfect storm – The assets that worry trustees

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Covid-19 has changed the way we live our lives and conduct business. Governments have borrowed trillions of dollars to stabilise their economies and fund the public health responses. Over the past few months, we have been asking members of the mallowstreet community about their views of the investment landscape, and where they see the key risks and opportunities. 

Half of schemes, however, are currently monitoring or reviewing their sponsor covenant carefully and are in the process of re-evaluating their investment strategy. But overall, investors appear to be feeling confident, with 89% of survey respondents stating that they have a good handle on the investment environment. 

Storm clouds are gathering… 

There are uncertainty and risks ahead. When it comes to property, 71% of those who participated in our research are worried about the asset class’s ability to offer yield. Respondents also indicated that they would be looking to decrease their allocation in the next few months. 

In the credit landscape, exposure to high yield remains a concern, with 57% of schemes worried about the asset class as recently as April. Sentiment has improved with only 18% of schemes in our July data worried, but will we see fund flows in the aftermath of such uncertainty?

To read more about how UK pension schemes are adapting to the changing environment, download our Insights Digest and send your questions to