The Pension Protection Fund (PPF) said it will diversify its return-seeking assets which, in the short- to medium-term, will mean less investment in listed equities and a new allocation to private equity and infrastructure investments, and a more global approach generally. The aim is to outperform its benchmarks during the year by 1.8%, rather than the current target of 1.45, the agency said in a news release.
The PPF will continue with its hedging strategy which seeks to mitigate the risk of a fall in assets against liabilities. Also, the PPF stressed that it will maintain its low-risk approach to investments; at least 65% of the portfolio will remain invested in cash and bonds.
“Our portfolio is nearing the £4 billion mark which means we now have far more opportunity to diversify our assets and greater buying power than ever before. Some investment markets are easier to access if you are a larger investor and the costs of that access come down too,” said PPF Chief Executive, Alan Rubenstein, in the announcement. “Our priority is to maximize the impact of our investments so that we get more return by diversifying into additional asset classes but with the same level of risk as before. A higher long-term performance is clearly in the best interests of those people who receive our compensation and of our levy payers.”
The new Statement of Investment Principles is here.