Institutional Asset Manager Newsletter 16.05.25

Calculating the immeasurable

Hot on the heels of last week’s report from Mercer on the growing attractions of the private markets, we have an interview this week with David Nable of Arcesium, a firm spun out of D E Shaw that specialises in providing operational and data infrastructure for asset managers helping them to run complex business investments across the liquidity and illiquidity curve.
It's these products that are currently quickening the pulse of investors from retail to institutional, bringing with them uncorrelated returns and potential outperformance, if the risk management can be finely tuned.
Nable says: "Many different types of participants are trying to work out how to work with private credit and asset servicing clients are looking at how to manage the investments, while service clients are trying to work out how to underwrite direct lending or work with a private markets firm.
"We do see the asset owners, such as pension funds, interested in these activities. Some are very sophisticated, while others are allocating to managers and may be doing so via a separate account as opposed to a co-mingled fund."
Gill Wadsworth reported on the Bank of England (BoE) interest rates cut to 4.25 per cent – the lowest for two years – last week, sparking widespread concern across the investment industry about future higher inflationary pressure.
Despite signing a "breakthrough" trade deal with Donald Trump which should keep the cost of goods down, the UK government still faces a challenging period ahead, she writes. However, Simeon Willis, Chief Investment Officer at XPS Group, said that the cut should be welcomed by most pension scheme investors despite the possibility of higher liability values.
"Traditionally, lower interest rates are seen as negative for pension schemes, because they increase the value of liabilities. But with most schemes now well-funded and highly hedged, many are less concerned with falling yields," he says.
These and other subjects will be discussed at this year’s IMPower Fund Forum, where I will be chairing some of the ETF panels. For a 10 per cent discount to attend, use this link and code: FKN3972ETFX. I hope to see you there.

Beverly Chandler, Managing Editor, Institutional Asset Manager
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