How institutional investors put money to ‘good use’ is set to be transformed within the next decade, according to ‘The Role of Institutional Money’ research1 from Canada Life Asset Management. This transformation is, however, being hindered by a lack of long-term planning.
The qualitative and quantitative study of over 200 pension trustees and consultants, chief investment officers, senior portfolio managers, and heads of property and real estate revealed institutional respondents currently view infrastructure (53%), housing (40%) and public buildings (35%) as the main ways to put institutional money to ‘good use’2.
In the long-term, institutional respondents have a significant appetite to drive change and put money to ‘good use’ in new areas. When exploring investment strategies with more than a 10 -year horizon, overseas developments (96%) and the regeneration of cities and the highstreets (90%) were cited as the potential key areas of investment.
The study also revealed areas where leveraging institutional money for ‘good use’ is being underutilised. Healthcare buildings tops this list for over two fifths (45%) of respondents, reflecting how “pandemic consciousness” is impacting short-term investor thinking. It is followed by environmental causes (37%) and green or natural spaces (38%).
Despite a desire to drive change, institutional respondents believe there are major bottlenecks to putting money to ‘good use’ in new areas. Two-fifths (39%) of respondents believe a lack of long-term planning is holding back institutional money being put to ‘good use’, followed by a lack of capital (36%) and a lack of opportunities (35%). The study found that a lack of long-term planning is more keenly expressed by those in senior roles, highlighting the importance of shifting to a long-term mindset.
Michael White, Head of UK Property, Canada Life Asset Management, said: “Over the next decade we are set to see a significant change in the way institutional money is put to good use. To drive this change, it will become increasingly important for institutional investors to adopt a long-term mindset from both an investment and culture perspective. This will take time, but as our research reveals, there is appetite from senior decision makers to adopt a new mindset around good use and planning for the long-term.
“The consensus around the underutilisation of institutional money for good use means we can expect to see these areas of investment have a major economic impact across the UK over the coming years. For these investments, in areas such as the regeneration of towns and cities, it will be vital for stakeholders across the asset management industry to work collaboratively to identify the best opportunities to 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.