UK pensions crisis exposes structural holes: Ninety One

Hendrik du Toit, the founder and chief executive of asset manager Ninety One, said the crisis in the UK pensions industry has pulled back the curtains on underlying risks built into Britain’s bond market.

“The situation in the pension market has just pointed — or lighted a spotlight on — the structural reason” underlying the dysfunction, du Toit said in an interview with Bloomberg Television’s Francine Lacqua and Tom Mackenzie on Friday. “There isn’t a risk pool in the UK.”

“Banks are not going to buy at scale” due to regulatory constraints, du Toit said. “But every economy needs a longer-term savings pool that’s willing to take risk.”

The crisis playing out in the UK is multi-layered, according to du Toit. “You have a proper bear market for fundamental reasons,” he said. “Then you have a situation caused by essentially a financial structure that was created by the pension funds…and on top of that, you have a government that — to say the least – has limited credibility.”

Generally, the current environment means Ninety One would “rather go to credit and emerging markets” to pursue yield, du Toit said.

© 2022 Bloomberg

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