A survey by Apha Real Capital shows increased interest from local authority pension funds in social infrastructure investments, ranging from education, health and social housing.
The great majority (87%) of UK local government pension scheme (LGPS) fund professionals see increased interest among the funds they help to manage in creating positive social impact from their investments, according to a survey by Alpha Real Capital.
According to the survey, social infrastructure, defined as “investments into property and infrastructure that provide essential services, such as health, housing, or education”, is attracting growing attention from LGPS funds.
The research found that more than three-quarters (77%) of LGPS fund professionals will concentrate their social infrastructure allocations on the UK only.
The trend is in line with the UK’s government ‘levelling up’, the term used to describe the emphasis on bridging the economic gap within communities and across geographical areas. 98% of respondents believe an allocation to social infrastructure supports levelling up.
When it comes to awarding social infrastructure mandates, more than half favour using third party managers, 31% prefer LGPS pools, and 12% segregated mandates. Only 2% prefer using their in-house teams.
Phillip Rose, CEO, Alpha Real Capital said, “It is very encouraging to see that LGPS funds continue to place such emphasis on generating positive social impact through their investments, and that this is becoming a greater priority. Ultimately, additional investment into social infrastructure will benefit the underserved in our communities at a time when public finances are extremely constrained.”
Lack of knowledge of the investment and impact characteristics remains the main barrier to investing in social infrastructure, followed by limited market opportunities, and restricted illiquidity budget, according to the survey.
