Investors seeking to Build Back Better face major obstacles

Pension trustees and investment managers face significant barriers to aligning their investment strategies with key elements of the government’s Build Back Better plan, according to recent research. These elements are infrastructure, skills, innovation, levelling up, net zero, and opportunities for growth.

The study, The Role of Institutional Money, by Canada Life Asset Management, found that a lack of long-term planning (43%) and a lack of investment opportunities (44%) are preventing institutional funds from contributing to the Build Back Better strategy.

This is despite pension trustees and investment managers being very familiar (31%) or moderately familiar (65%) with the government’s plan.

Other barriers highlighted by the report include:

• Lack of capital – 43%
• Regulatory challenges – 41%
• Limited will to align investment strategies with the plan – 39%
• Client reluctance – 26%

The way certain areas of the plan are currently accounted for – short-term as one to three years and long-term more than five – also creates difficulties. Two-fifths (41%) and one third (32%) of pension trustees and investment managers have investment strategies focusing on the skills and infrastructure pillars respectively within short-term strategies. Whereas net zero (72%) and growth opportunities (93%) are built into longer-term strategies.

The way institutional money is put to “good use” is set to be transformed within the next decade, said the report. Institutional respondents view overseas developments (96%) and the regeneration of cities and the high streets (90%) as potential key areas of investment.