Alastair O'Dell

Eddie McAvinchey, Scotland director at the National Wealth Fund, explains the role institutional investors can play in infrastructure and renewable energy and where he sees Scotland’s greatest investment opportunities.

Nest’s new venture capital strategy is about more than a £200 million allocation. It reflects a broader shift in UK DC investing, as master trusts become increasingly willing to move further up the company lifecycle in search of long-term returns.

Institutional investors remain committed to private markets despite geopolitical uncertainty, but Coller Capital’s latest Barometer suggests attention is shifting from increasing allocations to selecting managers, managing liquidity and refining portfolio construction.

Private credit secondaries are growing rapidly, with the strategy’s appeal extending beyond discounts, offering investors greater portfolio visibility, faster deployment and reduced J-curve effects.

Asset-backed finance continues to attract institutional investors seeking diversification and downside protection, but capturing the asset class’s premium requires specialist expertise, operational resources and extensive due diligence.

Moody’s believes long-term growth remains intact as the asset class evolves into a broader financial ecosystem.

As private credit markets expand, institutional investors are looking beyond traditional direct lending strategies and paying closer attention to portfolio construction, liquidity management and manager selection.

Infrastructure and real estate are increasingly being viewed as growth assets rather than portfolio diversifiers, with investors arguing they can play a much larger role in improving long-term retirement outcomes.

The challenge is ensuring domestic DC pension capital participates in the growth of British businesses.

Private markets have won a place in DC portfolios. Now schemes face the more difficult challenge of deploying capital at scale while balancing returns, fees, governance and growing political expectations.

Infrastructure investors are increasingly targeting batteries, heat pumps and data centres as volatile power markets, electrification and rising digital demand reshape the infrastructure landscape.

Institutional investors remain committed to private credit despite mounting scrutiny of the asset class, but are becoming more selective around underwriting standards and manager quality.