Towers Watson

Pensions Age Conference

By Ilonka Oudenampsen

The Pension Protection fund (PPF) has appointed seven farmland and timberland fund managers. Some managers will be funded immediately, while others are appointed for deferred investment.

The selected managers are Brookfield Asset Management, Dasos Capital Oy, GMO Renewable Resources, Hancock Timber Resource Group, Macquarie, New Forests Pty, and Stafford Timberland.

The PPF said the decision is part of the development of its alternative investment portfolio so it can benefit from greater diversification and reduce its overall risk. The investments will be predominantly in land and the operations needed to cultivate and market agricultural produce or to grow and sell timber.

PPF executive director for financial risk Martin Clarke said: “We now have an investment portfolio worth more than £12bn and the size of our assets means that we can take advantage of a broader range of investment opportunities.

“Investing in farm and timberland will complement our existing alternative investment portfolio, allow us to diversify our investments more widely and make our portfolio more resilient.

“But we do need to be aware that there are some risks in these asset classes, for instance land price risk. Therefore, our approach will be to invest conservatively – which is consistent with our overall low-risk strategy.”

The proportion of PPF assets allocated to farm and timberland will vary over time and depend on the opportunities available now and in the future, the fund said. All managers are appointed for four years, with the flexibility for two extensions of up to two years.

Farmland and timberland will be added to the list of permitted asset classes in the existing PPF Statement of Investment Principles.

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The Pensions Insurance Specialist

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