Almost 9 in 10 LGPS funds plan to increase local social investments

Almost nine in 10 (89 per cent) Local Government Pension Scheme (LGPS) fund professionals in England and Wales are planning to increase their allocation to local social investments over the next few years, research from Alpha Real Capital has revealed.

When asked for their fund’s definition of local investing, 54 per cent said it was within their local council area, 26 per cent said it was UK-wide, and 20 per cent said it was within their pool.

Alpha described seeing a growing trend for LGPS funds to increase their focus on local place-based investing and has advised that investing in real estate can work particularly well for pension funds looking to allocate capital whilst seeking to deliver a positive impact.

The investment manager also claimed that investment in social real estate lends itself naturally to place-based impact investing as it delivers the infrastructure communities rely on, and investors can work with local stakeholders to align interests and create a shared impact for the benefit of local people and places.

The research showed that LGPS funds are focused on increasing their level of local and social investing, according to Alpha Real Capital clients solutions, Stuart Hanson, who went on to speculate on the impact of such a change in investment, saying that £16bn would be unlocked for investment that contribute towards positive social outcomes if only 5 per cent of LGPS funds’ combined assets were allocated to local investment.

Alpha Real Capital social real estate fund manager, James Murray, commented: “Local investing provides LGPS funds with a unique opportunity to meet their financial objectives, and also make a significant positive social impact. The approach can be targeted or spread broadly at a national level, and we are seeing a growing trend towards place-based impacts that a hybrid national and regional approach offers.”

Alpha Real Capital CEO, Phillip Rose, added: “Investing locally in social real estate allows LGPS funds to make a real difference to social outcomes in terms of the quality and availability of social services, quality of life and economic opportunity. In Alpha’s experience, this can be achieved with attractive, long-term investment returns that are significantly inflation-linked.”

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