DWS has launched the DWS Secured Income Fund, an new fund aimed at small to medium-sized defined benefit pension plans looking for stable, long-term returns.
The Fund provides a diversified portfolio of secured income assets, including infrastructure debt, real estate debt, direct lending, asset-backed securities, collateralised loan obligations and leveraged loans.
Over half of UK defined benefit pension plans are in deficit, with insufficient assets to meet their liabilities. DWS Secured Income Fund offers these plans enhanced security of income through a solution where diverse private and structured credit assets are combined into a single, easy-to-access pooled fund.
For small and mid-sized defined benefit pension funds, which may have been restricted from investing in individual asset classes due to minimum size or governance requirements, this latest innovation offers the opportunity to invest in a pooled fund of secured income assets.
The Fund is a partnership with leading private debt pioneer Tikehau Capital as part of a strategic alliance with DWS to partner on growth initiatives. The launch is the latest innovation for pension funds following The Asset Management Exchange (AMX) and DWS’s recent launch of an investment solution that allows pension plans to express stewardship preferences in pooled funds.
Secured income assets offer stable long-term returns due to the contractual nature of asset cashflows, the expected resilience of the underlying assets to different economic cycles and the quality of underlying collateral.
Marcus Herbig, Head of Structured Income at DWS, says: “We are proud to launch this solution to help our pension clients focus on their long term obligations and to ensure they have a robust future funding plan. Secured income assets are an invaluable part of the de-risking journey for defined benefit pension plans with negative cashflows which still require returns in excess of those offered by UK government bonds. This solution can help close funding deficits whilst simultaneously helping maturing pension funds meet their need for income to pay benefits.”
Shalin Bhagwan, Head of UK Pensions Advisory and EMEA Consultants at DWS, adds: “In designing this fund we have listened to the requirements of UK pension funds and their investment consultants and worked closely with many of them to address their needs. The core building blocks of our solution include infrastructure debt, real estate debt and private corporate credit, all of which we believe will play an important role as society seeks to build back better post-COVID.”
Frédéric Giovansili, Deputy CEO at Tikehau Investment Management, adds: “We are delighted to work in partnership with DWS to launch a solution for small to medium sized pension funds which combines our expertise in direct lending and leveraged loans. This new investment strategy meets the objective of both DWS and Tikehau Capital to align our respective expertise in alternative investing and to offer bespoke financing solutions and sources of secure income to institutional investors.”