Invest in future growth sectors, not existing areas – PLSA

The investment industry should find new sources of growth to help rebuild economies damaged by the coronavirus pandemic, rather than recycling existing wealth, pension and money management executives said.

As the world emerges from the ongoing health crisis, investors should focus on sectors where growth has stagnated over recent years, speakers at the second day of the Pensions and Lifetime Savings Association's annual investment conference agreed Wednesday. They said the pandemic has shown the extent to which economies rely on delivery or home-care workers, examples of areas of investment where investors should look for the next growth opportunities.

Far too much of the investment industry is focused on investing and reinvesting into areas that have already performed well, said David Stewart, CIO of British Airways Pension Investment Management, which oversees £25.5 billion ($35.3 billion) in retirement plan assets.

Speaking during a panel discussion, Mr. Stewart said that the pandemic has shown that investors need to do more to ensure that equal opportunities are available to people and to tackle stagnating living standards.

To "build back better," he said, "the industry needs a renewed focus on creating growth, and therefore wealth," rather than recycling existing wealth.

For example, Mr. Stewart said that pension funds should not search for the next "unicorns" but instead set up and fund venture capital accelerator programs to support communities and regions and help "create a million little innovations."

Speakers on the panel also agreed they have a "duty of care" to their beneficiaries and that investment decisions should take into consideration plan participants' views on how capital is distributed.

In post-pandemic economies, new industries will emerge as countries navigate climate change and the transition to a low-carbon economy, speakers said.

Addressing the world's response to the pandemic, Roelfien Kuijpers, global ESG client officer at DWS Group, said, "We have not done a great job," adding that there needs to be better coordination to cope with any future pandemics.

Ms. Kuijpers said that international frameworks such as the United Nations' sustainable development goals, for example, are required to help investors unite to focus on investments that can strengthen the health system.