Key Takeaways
- • Standard Life has launched Future Opportunities, an alternatives-focused pension default strategy targeting around a 25 per cent allocation to private markets over the long term, across private equity, private debt, real assets and venture capital.
- • The private markets exposure will be phased in gradually, with assets initially held in public markets before alternative investments are deployed, and the allocation will shift with market conditions and investment assumptions.
- • Standard Life, which manages £317bn in assets, will use Future Growth Capital to manage the private markets allocation, including direct deal underwriting and portfolio construction.
- • The strategy carries a variable annual management charge and a performance fee for private markets via a long-term asset fund, and builds on the firm's £39bn Sustainable Multi Asset default offering.
- • The launch positions Standard Life within the Mansion House Compact and Mansion House Accord, which commit signatory providers to invest at least 10 per cent of default DC funds in private markets by 2030.
Summary
Standard Life has launched a new alternatives-focused pension default solution named Future Opportunities, according to the British pension provider. The strategy will invest in assets including private debt and real assets, and will target around a 25 per cent allocation to private markets over the long term, spanning private equity, private debt, real assets and venture capital.
The private markets exposure will be introduced gradually. Investments will initially sit in public markets before alternative assets are deployed, and the allocation will evolve depending on market conditions and investment assumptions, the firm said. Standard Life, which manages £317bn in assets, said it has built significant oversight into the solution. This includes reviews covering strategic asset allocation, asset quality, the pace of deployment, the impact on net member outcomes and fee transparency.
The default strategy will be managed in part by Future Growth Capital, which will handle private market allocations including direct deal underwriting and portfolio construction. The solution introduces a transparent charging model comprising a variable annual management charge and a performance fee for private markets accessed via a long-term asset fund.
The launch follows Standard Life's position as one of the original signatories of the Mansion House Compact and one of 17 pension providers that signed the Mansion House Accord. That voluntary accord commits providers to invest at least 10 per cent of their default defined contribution funds into private markets by 2030. Future Opportunities builds on Standard Life's £39bn Sustainable Multi Asset default offering.
Andy Briggs, chief executive of Standard Life, said UK pension savers have received lower returns than counterparts in Australia and Canada, partly because the UK has allocated much less capital to private markets than other countries. Alasdair Birrell, workplace investment development lead, said the firm anticipates strong demand from employers and DC members seeking better returns and diversification, although the strategy is currently unfamiliar to many employers and members.
The private markets exposure will be introduced gradually. Investments will initially sit in public markets before alternative assets are deployed, and the allocation will evolve depending on market conditions and investment assumptions, the firm said. Standard Life, which manages £317bn in assets, said it has built significant oversight into the solution. This includes reviews covering strategic asset allocation, asset quality, the pace of deployment, the impact on net member outcomes and fee transparency.
The default strategy will be managed in part by Future Growth Capital, which will handle private market allocations including direct deal underwriting and portfolio construction. The solution introduces a transparent charging model comprising a variable annual management charge and a performance fee for private markets accessed via a long-term asset fund.
The launch follows Standard Life's position as one of the original signatories of the Mansion House Compact and one of 17 pension providers that signed the Mansion House Accord. That voluntary accord commits providers to invest at least 10 per cent of their default defined contribution funds into private markets by 2030. Future Opportunities builds on Standard Life's £39bn Sustainable Multi Asset default offering.
Andy Briggs, chief executive of Standard Life, said UK pension savers have received lower returns than counterparts in Australia and Canada, partly because the UK has allocated much less capital to private markets than other countries. Alasdair Birrell, workplace investment development lead, said the firm anticipates strong demand from employers and DC members seeking better returns and diversification, although the strategy is currently unfamiliar to many employers and members.
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