Institutional investors increasingly coupling long-term, inflation-linked strategies with responsible investment credentials into their portfolios.
LONDON, 26 March 2018 – Institutional investors are increasingly incorporating secure income assets into their portfolios as they look to generate cash flows, diversify risk and seek viable long-term alternatives to index-linked gilts, according to Willis Towers Watson.
Secure income assets include strategies spanning real estate, infrastructure, renewable energy and real asset debt sectors, which can provide inflation-linked cashflows coupled with risk-adjusted returns superior to investment-grade credit and index-linked gilts.
Duncan Hale, Portfolio Manager of Willis Towers Watson’s Secure Income Fund, said: “The benefits of long-term, inflation linked returns are clear and, if implemented well, can deliver 4% yields over the long term. In addition, there has been a ging recognition of opportunities within the market which can offer investors robust cash-flows alongside strong societal benefits.”
One such sector that incorporates both these qualities is renewable energy, an integral part of the UK’s sustainable energy system and decarbonisation agenda as the country aims for over 30% of electricity to be generated by renewables in the long-term.
“A lot of early discussion around renewables has focused on the environmental benefits. However, since 2009, there has been an increased ability to articulate and demonstrate more clearly their economic and financial benefits too. Consequently, we have seen significant investment in renewable energy production over the past few years. These are attractive assets that provide strong returns, whilst also delivering wider environmental benefits,” said Duncan Hale.
Willis Towers Watson’s Secure Income Fund, accesses a diversified range of opportunities with a focus on inflation-linked income and uses all implementation options including secondaries and co-investments. It launched in March 2017.
“Through our scale and engagement as a result of developing strong relationships with managers, we have been able to implement innovative ideas whilst driving value for our clients through enhanced returns and reduced risk at an overall portfolio level,” said Duncan Hale.
“In partnering with the best managers that the market can offer, we are able to operate at the cutting edge of investment innovation, whilst simultaneously deploying assets at considerable speed. This has been reflected in the strong demand we’ve seen in our Secure Income Fund which has received £750m of commitments from 25 clients since launching a year ago.”
Willis Towers Watson’s Investments business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, assets under advisory of over US$2.3 trillion and over US$87 billion of assets under management.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn
