The Lemon Fool

With apologies if this should be (or has been) posted elsewhere.

https://youtu.be/ewixdAlUn6I

“Nine of the major DC Pension Providers have agreed (with Chancellor Jeremy Hunt in Mansion House Reforms) that they will commit to investing 5% of the assets in their Default Funds into unlisted equities by 2030.”

Pete Matthews (Chartered Financial Advisor) argues this adds more risk and more charges.
No connection at all, but his latest upload appeared on my YouTube offerings.

I have a son who has one of these workplace pensions, in the ‘default’ option, and think it probably is a good idea to ‘review the situation’.

That looks sensible to me. If those unlisted equities cannot be sold on the open market, I would not want them sneaked into my pension fund.

oldapple wrote:Pete Matthews (Chartered Financial Advisor) argues this adds more risk and more charges.

I think he means risk of asset failure rather than risk of volatile prices. It's a trade off between higher risk and higher reward as with any equity investment or even bond investment with a higher coupon because of default risk.

It's not just pensions, OEICs could be leant on to increase their percentage in unlisted assets although objectively "safer" would be to encourage investment in ITs where the market price acts as a buffer against overstated or understated valuations.

Alaric wrote:I think he means risk of asset failure rather than risk of volatile prices.

If the asset is illiquid, there is no market price to be volatile.

TBH I 'm not losing sleep over it.

You could equally make the argument that it's a fully justified and reasonable move - as one of the ways for normal investors to participate in a sector that they usually wouldn't be able to.

Yes, returns aren't guaranteed, but nor are they in any other asset class. The performance of the portfolio as a whole is what matters.