On the go: Master trust Cushon has launched a new investment strategy that will see a 15 per cent allocation to private markets, in an attempt to “reduce investment risk”.
The strategy, which launches in early 2022, comes after research from the provider which found that 62 per cent of employees would engage more with their pension if they knew it was having a positive impact on climate change.
Cushon’s 200,000 members’ pensions will be invested in environmental projects such as the planting of new sustainable forests and in financing new wind and solar farms.
For the first time, private market investments in both developed and emerging markets will be included by trustees, the master trust stated.
Roger Mattingly, Cushon’s chair, said: “The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment, which we believe supports better long-term financial outcomes for our members.
“We have spent considerable time undertaking due diligence of the investments and fund managers, as well as negotiating costs to ensure that we can include private market investments well within the confines of the charge cap.
“We are certain the new investment strategy will deliver excellent retirement outcomes for our members.”
The trustees will work with Schroders’ private markets investment division, Schroders Capital, to manage the investments in new high-impact projects including sustainable infrastructure, clean tech, natural capital, financial inclusion, and climate insurance, as well as social and affordable housing.
Lombard Odier Investment Managers will manage listed bond investments, and Wellington will manage listed social impact bonds.
Listed equities will be managed by Macquarie to a Cushon custom-designed climate and social impact index created by Solactive.
Julius Pursaill, strategic adviser at Cushon, said: “Private markets increasingly offer sources of return that listed markets don’t — forestry and micro finance, for example, as well as private equity. These give members access to better diversification, higher expected returns, and ultimately significantly improved investment outcomes.
“We will deliver regular updates to members about the positive change their pension savings are delivering for the planet and look forward to announcing novel ways our members will be able to engage with these investments in the coming months,” he added.
