Asset allocation trends in the UK
Mercer’s UK Investment Insights 2022 provides a comprehensive overview of investment strategy across the UK defined benefits pension industry, and identifies emerging trends in the behaviour of 441 institutional investors across the UK, reflecting total assets of approximately £344 billion. Note that the survey data were collected before the gilts sell-off in late 2022; there are likely to be changes by schemes as a result of this market turmoil that will not be captured in this survey.
Monetary tightening, a stock market correction, an energy crisis and a major geopolitical event were the leading concerns for investors going into 2022 and they proved to be correct on all fronts.
Following the turbulent journey of the last two years, the overwhelming majority of investors plan to review investment strategy, manager mandates or make other governance-related changes.
For income-producing portfolios, investors are considering branching out into private debt, real asset funds and multi-asset income funds but following the events of 2022, we expect that liquidity management will come more to the fore.
Environmental, social and governance (ESG) is well integrated into the vast majority of UK investors’ arrangements: 73% are incorporating ESG into their investment strategy decisions, and 83% into their selection of investment managers.
10% of advisory schemes have dedicated resources focused on sustainable investment. Of those that don’t, 16% say they are likely to dedicate resources to sustainable investment within the next year.
Around one-eighth of advisory clients have set net-zero carbon targets, and almost one-fifth are using a low- carbon or climate-related index. 17% of those that aren’t currently using such an index do however plan to do so over the next year.
UK DB Intellectual Capital Leader and Senior
UK Sustainability Integration Lead and Senior
Senior Strategic Investment Research Specialist
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