Aegon introduces private markets to £12bn workplace default fund

Aegon Updates £12bn Workplace Default Fund with Private Markets and ESG Investments

Aegon, a leading pensions and investments firm, has made significant updates to its £12bn workplace default fund to incorporate private markets and more environmentally and socially responsible investments. This move aims to enhance risk-adjusted returns and provide access to a broader range of investment opportunities within its Universal Balanced Collection Fund.

Partnering with three fund managers, Aegon has introduced various strategies to diversify its portfolio. BlackRock will manage a bespoke alternative private markets strategy, including private equity, private debt, real estate, and infrastructure. Additionally, they will oversee a fully ESG-integrated passive equities and bonds strategy with a decarbonisation target set for the fourth quarter of 2024.

Aegon Asset Management will handle a new multi-asset credit mandate, including global high yield, asset-backed securities, and emerging market debt strategies. They will also manage a private debt and alternative fixed income fund, pending Financial Conduct Authority (FCA) approval. JP Morgan Asset Management will manage a strategy offering exposure to private equity, infrastructure, and forestry, subject to FCA approval as well.

The private market allocations will be housed within Long-Term Asset Fund (LTAF) structures, pending regulatory approval. These structures aim to facilitate investments in long-term, illiquid assets, including private credit.

Lorna Blyth, managing director of investment proposition at Aegon, highlighted that these changes align with the company’s net-zero targets, aiming to achieve net-zero greenhouse gas emissions for all default funds by 2050 and a 50% reduction in emissions by 2030. The company also aims to invest £500m in climate solutions by 2026.

Upon completion of the Universal Balanced Collection changes in 2025, Aegon anticipates moving over £30bn of default assets into funds that consider ESG factors. Fund administrator Carne Group will serve as the Authorised Corporate Director of the Aegon Asset Management and JP Morgan Asset Management LTAFs.

Aegon assured that the fund’s objective and risk appetite will remain unchanged, with no alterations to the fixed management fee expected, although an increase in additional expenses is anticipated. This strategic shift towards private markets and ESG-friendly investments reflects Aegon’s commitment to sustainable and responsible investing practices.

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