The group on Nov. 24 published its Investing in Less Liquid Assets: Key Considerations guides, which aim to give DC trustees advice on key issues such as value for money, performance fees and liquidity management related to less-liquid assets. The guides also cover fund structures, due diligence and recommendations for consultants.
The guides relate to investments in assets such as venture capital, private equity, infrastructure, private debt and real estate.
U.K. corporate DC plan assets total more than £500 billion ($591.1 billion), up from about £200 billion in 2012 when automatic enrollment was introduced in the U.K., and is set to grow to £1 trillion by 2030.
"As U.K. DC schemes have developed and grown in size, the range of investment opportunities available to these schemes has increased significantly," the guides said. "And this is likely to increase still further in the years to come."
The guides said DC plans currently invest "relatively little in less liquid assets, compared to U.K. defined benefit pension schemes and DC schemes in other countries, such as Australia." That fact reflects several factors, including a focus on keeping costs low.
"However, some U.K. DC schemes are now starting to consider whether and how allocating to less liquid assets as part of a diversified portfolio within a default arrangement could improve member outcomes," such as improving potential risk-adjusted returns, reducing risk through diversification and exposure to net-zero-related assets.