COVID-19 exposed many economic vulnerabilities. But the recovery from the pandemic presents an opportunity to rethink how to better allocate investment capital to bolster economic resilience.
Investing in the economy is part of the business of pension providers – significant capital is already allocated to equities and corporate bonds. However, despite having a long-term investment outlook, their historical allocations to less liquid, long-term assets such as infrastructure (e.g. transport, utilities and energy, communications, social infrastructure) are low. Unlisted infrastructure equity and debt, for example, accounted for only 1.3% of total pension fund assets under management in 2017.
Removing barriers to alternative investments could direct more capital to longer-term assets – and bolster the transition to more resilient economies.