Aegon is overhauling its £12 billion workplace default fund to include private markets and enhanced ESG integration.
The transformation of the Universal Balanced Collection Fund aims to improve risk-adjusted returns, enhance diversification and provide innovative investment opportunities in areas that have historically been harder for workplace savers to access, the firm said.
The transformation, which will take place from the third quarter of 2024, will be available to the 700,000 members of the fund, with future plans to extend availability across the wider Aegon workplace offering. The Universal Balanced Collection Fund is available to Aegon Retirement Choices and One Retirement investors, as well as some off-platform products.
Aegon will partner with three leading fund managers to provide a bespoke solution, leveraging their specialised knowledge and resources.
BlackRock will manage a bespoke, diversified alternative private markets strategy, including private equity, private debt, real estate and infrastructure. It will also manage a fully ESG integrated passive equities and bonds strategy with a year-on-year decarbonisation from the fourth quarter of this year.
Aegon Asset Management will manage a new multi-asset credit mandate which includes global high yield, asset backed securities and emerging market debt strategies from the second half of 2024. In addition, they will also manage a private debt and alternative fixed income fund from early 2025.
In addition, J.P Morgan Asset Management will also manage a bespoke strategy in early 2025 subject to FCA approval, offering exposure to private equity, infrastructure and forestry.
Lorna Blyth, managing director of Investment Proposition, said: “We believe our changes will improve the growth potential of the Universal Balanced Collection and future Aegon funds that utilise these enhanced capabilities. The changes target robust risk management and diversification to offer members improved outcomes and value for money.
“The bold move also aligns with our commitment to reach net-zero greenhouse gas emissions for our full range of default funds by 2050 and to a 50% reduction in emissions by 2030. It also significantly supports our desire to invest £500 million in climate solutions by 2026; investments that directly contribute to climate change mitigation and/or adaption. We expect many of these solutions to come from unlisted equities which aligns with our Mansion House Compact aim to invest at least 5% of our default fund assets in unlisted equities by 2030.”
The retirement specialist plans to house the private market allocations within Long-Term Asset Fund structures, subject to regulatory approval. Came Group, a provider of fund regulation and governance solutions for the asset management industry, will be acting as the Authorised Corporate Director of the Aegon Asset Management and J.P Morgan Asset Management LTAF’s.
