Pension schemes looking to diversify portfolios with renewable energy allocations

Pension schemes, institutional investors and wealth managers have reported they will increase allocations to renewable energy as part of diversification strategies, a survey from Downing has revealed.

The study, which was conducted amongst 100 professional investors, found that 92 per cent of respondents were looking to diversify their portfolios using renewable energy assets over the next 18 months.

Downing found that solar was the area of renewable energy that most respondents believed would be likely to achieve successful diversification, with 76 per cent of those surveyed indicating so.

Nearly three-quarters (74 per cent) cited hydro as a successful diversification asset, while 64 per cent cited biomass, 59 per cent mentioned wind energy, and 27 per cent cited tidal and wave energy.

The geography of investment was also investigated in Downing’s survey, with 80 per cent of respondents expecting to allocate renewable energy assets in Europe (excluding the UK) and North America in the next 18 months, ahead of the UK (76 per cent), Asia (55 per cent) and other parts of the world (44 per cent).

Downing Renewables & Infrastructure Trust investment director, Henrick Dahlstrom, commented: “It makes sense that investors see renewable energy as a reliable diversifier.

“UK pension funds recognise the value these assets have to portfolios, and we have already seen a trend to increasing allocations, which looks set to continue over the next year and a half.”

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