Reports and Briefing Notes

DC scheme investment into Secured Finance assets

The Pensions Policy Institute (PPI) is today publishing 'DC scheme investment into Secured Finance assets'.

Building on previous PPI research “DC scheme investment in illiquid and alternative assets”, this report looks at the implications of investment into one specific alternative asset, Secured Finance, a type of private credit. Secured Finance investments are typically investments into debt instruments that are separate from traditional investments into loans or bonds on the public market. The significant structural characteristic of Secured Finance investments is that the assets are backed (secured) by collateral in the form of physical collateral (for example, buildings) or financial collateral (for example, pools of mortgages or credits), which can be used to provide a payment in the case of default of the issuer. Secured Finance could potentially provide benefits to members of large DC schemes if used as part of a diversified portfolio. However, there are increased costs and risks attached to these products and therefore care must be taken to ensure that investment portfolios and members are able to bear the increased risks.