Germany’s WTW umbrella funds, Robust and Dynamik, now provide institutional investors access to private markets, an increasingly important asset class for occupational pensions, following a strategic realignment as the funds mark 10 years and €1.5bn in pension assets under management.

The recent changes to the funds allow up to 20 per cent of the fund’s money to be invested in private markets, in compliance with regulations and with no restrictions on selling.

The funds were designed to meet different investor needs, with Robust offering a more conservative investment strategy with a higher interest rate duration, while Dynamik offers greater return opportunities with a higher equity allocation.

Together, they create an investment solution that allows both smaller pension funds and large investors to access widely diversified pension investments.

Each client receives advice through an asset-liability management study, a review that compares future payments with available assets to determine the best balance between the two funds.

WTW Investments director, Benjamin Carreras Painter, said that private markets are now an “indispensable” part of institutional portfolios and WTW’s solution has been designed to allow smaller funds to benefit without high minimum amounts or complex fee models, which he said was “unique” in the market.

WTW explained that the reason why private markets are gaining importance worldwide is due to fewer companies going public and an increased amount of economic growth occurring outside the public capital markets.

With stock markets heavily dominated by a few tech giants, WTW said that investments in unlisted companies can offer broader diversification and relatively stable long-term returns.

In line with this trend, WTW launched the Private Equity Access Fund last year. The fund allows smaller pension funds to invest in private equity without the high costs typically linked to fund-of-funds structures.

Looking back, Carreras Painter said that the past decade has been marked by “major upheavals” in the capital markets, from zero interest rates to high inflation, and during this period, the firm’s solutions have proven their value.

“The funds are distinguished by robust asset allocation, a long-term track record, high scalability, and, more recently, access to investment opportunities that were once available only to a select few investors,” Carreras Painter explained.

Over the past 10 years, despite market volatility and crises, the Robust and Dynamik funds have delivered returns of up to 5.3 per cent per year.

At the same time, the firm acknowledged that the current capital market environment remains challenging, with higher interest rates, ongoing inflation risks, and geopolitical uncertainty presenting investors with new difficulties.

The current higher interest rate environment, combined with adjustments to the funds’ strategies, means that projected returns over the next 10 years are expected to be higher than those achieved over the past decade, with long-term expected returns after fees of 5 per cent for Robust and 6.3 per cent for Dynamik.

In response to these challenges, the firm plans to continue developing its funds, with an emphasis on sustainable investments, alternative asset classes such as infrastructure and private credit, and technologies that improve efficiency and transparency.

"Our aim is to continue to be a reliable partner for pension funds over the next ten years, with solutions that ensure stability, open up opportunities, and adapt flexibly to an increasingly complex environment,” Carreras Painter said.

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