With interest rates still languishing at historical lows, one of the biggest challenges for pension funds is how to generate income. In this morning educational Investment Focus, we will hear from four leading managers about their approaches on how to generate reliable income streams from an investment portfolio. Over the course of the morning, delegates will breakout into small groups and participate in these interactive presentations. The morning is also available for CPD accreditation.
Registration, tea and coffee
Welcome address and introductions
Rotating Investment Masterclass I: RARE Infrastructure | Listed infrastructure - providing stable income in changing times
Investors are on the hunt for alternative sources of income. Listed infrastructure can provide investors with an attractive alternative source of income. Infrastructure assets not only provide stable income streams through economic cycles but the dividends paid out should be growing and recurring over time. Infrastructure also acts as a diversifier, having lower beta and correlation to other assets. The underlying return streams of infrastructure companies (essential services, backed by hard assets with a degree of price certainty) are strongly linked to the regulatory or contractual frameworks in place, rather than typical drivers of equity and bond returns. In rising rate periods, increases can be passed through at the next regulatory reset. RARE has been managing Income focused Infrastructure strategies since 2010.
Rotating Investment Masterclass II: UBS Asset Management | Long-term, inflation-protected cashflows accessed through Long Income UK Property
Long income property has many characteristics that are particularly attractive to pension schemes facing short to medium-term challenges in funding their ongoing commitments. Long income property can also potentially offer a compelling risk-adjusted income premium over gilts and investment-grade corporate debt. In addition to delivering a level of income that compares very favourably with these traditional bond alternatives, the asset class can offer security, predictability and typically a high degree of inflation protection. However, not all long income property investments are equally desirable. Investors need to be mindful of the megatrends that are re-shaping the economy and focus on the sectors with potential, and also be wary of the sectors that are vulnerable in the long-term.
Coffee, tea and networking
Rotating Investment Masterclass III: M&G Investments | CDI – meeting your cash liabilities as they fall due
When using physical assets to match cash liabilities, what should form part of your universe? How much accuracy is necessary for the longer dated cashflows? Do you have more appetite for perceived illiquid assets than you may think? If so, what extra returns and protections should you demand if you can give up some liquidity? What sorts of assets can provide the duration to match liabilities, the income to pay pensions and the extra returns to help close funding deficits? We look at what insurers have been doing for decades, and what UK DB schemes can do in the world of cash flow driven investing.
Rotating Investment Masterclass IV: Aberdeen Standard | Secure income and cash flow
Secure income strategies can be an attractive way for pension schemes to meet their growing annual cash flow needs while capturing illiquidity premia. By investing in a diverse range of private credit assets in a single fund, investors are able to access relatively uncorrelated areas of the economy in an integrated way, with more selective deployment of capital. The Secure Income and Cash Flow Portfolio will invest in secured private credit, including commercial real estate debt, infrastructure debt and private placement bonds. Relative to similarly-rated (BBB+) public corporate bonds, the portfolio should provide investors a higher yield, an improved risk profile, and access to a range of unique performance drivers.
Lunch and networking