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Bloomberg
One of the UK’s largest pension funds, which oversees the retirement assets of 350,000 British railworkers, is betting on private credit to help preserve returns during the next downturn.
RPMI Railpen aims to boost its exposure to private debt to as much as 40% within a private investment strategy totaling 4.5 billion pounds ($5.5 billion) across two funds. While still a fraction of the scheme’s 30 billion pound asset total, the value of one of the funds dedicated to private markets doubled to almost 1 billion pounds in 2018 from a year earlier.
“When the cycle turns, debt will be affected, but likely to a lesser degree than the equity piece, hence including the strategy in a wider private markets portfolio,†Andrea Ash, investment director at RPMI Railpen, said in an interview.
Institutional investors such as RPMI Railpen are pivoting toward private credit as they search for returns amid ultra-low interest rates and negative yields. A July survey of more than 550 European buy-side firms revealed that private debt would be among the most favored investment asset classes in the next three years, alongside private equity and infrastructure.