Case Studies

U.K. Public Pension Fund

Client Name

U.K. Public Pension Fund

Summary

A global, diversified segregated portfolio of funds investing in real assets, including real estate, infrastructure, timber and agriculture (farmland.)

Challenge

With a new allocation to alternative real assets, this client was seeking sustainable investments in property, infrastructure and timberland-farmland to meet specific responsible, environmental and financial risk-reward criteria.

Solution

Townsend worked collaboratively with the client to develop a custom investment strategy designed to improve risk-adjusted returns, enhance diversification, overcome difficult economic conditions and strengthen the client’s commitment as a long term, responsible investor.

To help achieve these goals, the Fund targeted a broader asset range and increased real asset allocation to include property, infrastructure and timberland-farmland.

Our open-architecture, global real asset investment platform enables this creative investment strategy. The Fund can build a durable, strategic core while taking advantage of tactical opportunities as they arise across the full real asset class opportunity set and risk/return profile.

The resulting global portfolio has a target allocation to real assets of 12% and a target net return after inflation of 4-6%. With specific investment guidelines by property type, manager, investment size, leverage and geography, the fund has general asset class guidelines optimized for flexibility and risk/return.

  • Property             < 65%
  • Timberland        < 30%
  • Infrastructure     < 50%
  • Agriculture         < 40%

Outcome

This mandate began in early 2013 with the portfolio expected to develop over 2-4 years with a measured deployment of global capital into sustainable real assets. The portfolio may invest in both open-end and closed-end structures, including limited partnerships and both primary and secondary funds.

In early 2014, client portfolio had approximately £150 million in commitments across 21 investment holdings. Recent investments include a UK renewable energy infrastructure fund and global, diversified forestry fund along with several European property funds— both equity and debt.


The above example is for illustrative purposes only. It does not constitute a past specific recommendation for current investment. Townsend’s view regarding this example may be changed or modified at any time without further notice to you. Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein. Investing involves risk, including possible loss of principal.