Sophisticated pension investors and sovereign wealth funds are integrating geoeconomic considerations in their assessment of risks & returns across asset classes and jurisdictions.
They are also raising their allocation to private market assets across the board: PE, VC, and also infrastructure, farmland and forestry etc.
The current geo-economic realignment could favour ‘pension superpowers’ like the US, Canada, Australia, Japan, Holland, and the United Kingdom, which hold more than 70% of global invested assets…
Nations such as Australia and Canada, with substantially higher than average retirement assets (more than 160% of GDP), will contribute positively to the financing of high tech ventures and startups, as well as renewable energy and transition mineral mining (Lithium, Cobalt, Nickel), thus fueling economic growth at home and abroad (FDI) by deploying more long-term capital to key sectors.
The notion that non-listed investments are ‘alternative’ may no longer be true, as large institutional investors now have an allocation to private markets of 20% to 50% of their overall assets.
As pension funds take a more holistic approach to the “portfolio of the future”, it will involve private markets as a more central component of their investment strategy.
Keywords: Private Assets, Private Equity, Venture Capital, US, Canada, Australia, European Union, UK, Asset Allocation, Bidenomics, Geoeconomics
JEL Classification: F20, F56, G11, G12, H54, H55, O20, O25, Q01, L32, L38