As the UK government continues to push its Build Back Better plan, Canada Life Asset Management’s ‘The Role of Institutional Money’ research1 reveals pension trustees and investment managers are facing significant barriers to align their investment strategies with the key pillars of the plan: infrastructure, skills, innovation, levelling up, net zero, and opportunities for growth.
The Build Back Better plan was initially launched in March 2021 to support economic growth through significant investment. Despite 31% of pension trustees and investment managers being very familiar with the government’s plan, while a further 65% are moderately familiar, a lack of long-term planning (43%) and a lack of investment opportunities (44%) are holding back institutional money contributing to the government’s Build Back Better strategy. Pension trustees and investment managers also stated the following as major barriers:
- Lack of capital - 43%
- Regulatory challenges - 41%
- Limited will to align investment strategies with the plan - 39%
- Client reluctance - 26%
The research also revealed major differences in how different areas of the Build Back Better plan are currently accounted for in short (1-3 years) and long-term (over 5 years) investment strategies. Two-fifths (41%) and a third (32%) of pension trustees and investment managers have investment strategies focusing on the skills and infrastructure pillars of the Build Back Better plan in the short-term, respectively. Whereas net zero and opportunities for growth are built into longer-term strategies for 72% and 93%.
The latest results from ‘The Role of Institutional Money’ research follow recent findings from Canada Life Asset Management that revealed the way institutional money is put to ‘good use’ is set to be transformed within the next decade. Institutional respondents view overseas developments (96%) and the regeneration of cities and the highstreets (90%) as potential key areas of investment.
Michael White, Head of UK Property, Canada Life Asset Management, said: “Since the start of the Covid-19 pandemic the government has made many calls for institutional investors to support the country’s efforts to ‘build back better’. While pension trustees and investment managers are familiar with the government’s intentions and many are showing an appetite to align their investment strategies with the key pillars of the Build Back Better plan, they are facing significant barriers. This ranges from a lack of long-term planning to limited investment opportunities.
“If the Build Back Better plan is going to be a success, it is crucial that the industry overcomes these barriers. This can only happen if stakeholders across the asset management industry work collaboratively, supported by clarity of policy, to ensure institutional money can be put to good use and create a positive impact for society.”
1Qualitative and quantitative research conducted in October 2021 by Canada Life Asset Management and Savanta. The sample of 203 consisted of 54 pension trustees/pension investment managers/pensions investment consultants, 31 heads of property/real estate, 56 CIO/CFO/Finance Directors, 30 senior portfolio/fund managers, 32 financial controllers. All work for funds which manage over £50 million
2For this survey, good use refers to the money invested in a way that creates positive impacts for society. For example, the construction of new roads, bridges and transport links, the regeneration of city centres, the building of hospitals etc.
Important information
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail investors.
The value of investments may fall as well as rise and investors may not get back the amount invested.
No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness.
The views expressed in this document are those of the Canada Life Asset Management at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.