PPF to build alternatives credit programme

The UK’s £3.9bn pension lifeboat, which earlier this year created a 20% allocation to alternatives, will hire managers to run a credit strategy within the alternatives carve-out.

The UK’s Pension Protection Fund, which carved out a 20 percent allocation to alternatives earlier this year, plans to invest a portion of that allocation to alternative credit strategies.

The £3.9 billion (€4.6 billion; $5.9 billion) PPF, which acts like a safety net for pension scheme members of collapsed businesses, hasn’t yet decided on a specific percentage of its alternative allocation that it will dedicate to credit strategies, a spokesperson told PEO.

The pension lifeboat is looking to hire managers for the strategy. Expressions of interest are due 27 July, and the PPF aims to hire managers by year’s end, the spokesperson said.

“Access to investment managers in this sector allows the fund to generate a contribution to our return target of 1.8 percent over LIBOR, through investments which have shown a low level of correlation to our existing strategies due to differences in liquidity and capital structure exposure,” the spokesperson said. “This allows the fund to maintain our overall low risk investment strategy and generate good returns for our stakeholders.”

PPF’s 20 percent allocation to alternatives – including private equity, real estate, infrastructure and absolute returns strategies – opened up a pool of £780 million for investments across the asset classes.

The 20 percent is not evenly split between the asset classes, which allows the investment committee, led by CIO Ian McKinlay, more flexibility over investment decisions. PPF took two years to prep its alternatives programme.