FundFire: Pensions to Boost Investments in Real Estate, Infrastructure in ‘25
Margaret Belmondo of NEPC was recently featured in a FundFire article discussing why pensions in certain states are increasing their focus on real assets, driven by stronger real estate fundamentals and AI infrastructure. View excerpts below or read the full article on the FundFire site here.
Pensions in New York, California, Ohio, Connecticut and New Hampshire are upping their focus on real assets, spurred by improved real estate fundamentals and AI infrastructure.
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Real estate deal pricing appears to have stabilized as transaction volumes started to rebound in many markets, said Margaret Belmondo, head of the public fund practice at institutional consulting firm NEPC.
“It remains a favorable time to be a liquidity or solution provider, with opportunities in real estate lending, secondaries, and opportunistic equity strategies,” Belmondo said. “After several years of limited activity, real estate fundraising may start to recover in 2025 as private real estate values improve.”
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Continued investor excitement around sectors like digital assets and the energy transition, coupled with investors building new target allocations, should sustain strong capital raising in 2025, Belmondo said.
“A notable trend is the rise of smaller infrastructure firms, often spin-offs from larger players, which presents promising opportunities in the lower-middle market,” she said.
And as some investors are shifting away from “strict ESG considerations,” such moves have triggered a fundraising pickup in the energy sector – although still “modest compared to the mid-2010s,” said Belmondo.
Pensions & Investments: SECURE 2.0, Retirement Income and Litigation Risk Lead the DC Menu for 2025
NEPC’s Mikaylee O’Connor was recently quoted in a Pensions & Investments article discussing what defined contribution executives can do in 2025, despite some uncertainty. View excerpts below or read the full article on the Pensions & Investments site here.
As 2025 portends to be filled with political, legislative and regulatory uncertainty, defined contribution plan executives are focusing on what they can do and should do — rather than what might happen.
“Uncertainty creates inaction,” said Mikaylee O’Connor, head of defined contribution solutions at NEPC.
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Managed accounts will come under greater scrutiny by sponsors, predicted NEPC’s O’Connor, noting that participants’ willingness to provide detailed financial information is crucial to this feature’s success.
“The big focus is on the managed account provider to make sure managed accounts are understood (by participants) and adding value,” she said.
ERISA lawsuits against sponsors offering managed accounts “has caused a cooling effect or an inquiry effect,” she said. The primary complaint is that managed account fees are excessive.
“The main concern of sponsors is the need for participant input,” she added. “If participants aren’t engaging, then they are paying high fees” compared to a target-date fund.
O’Connor said she expected “a lot of pressure” on managed account providers to reduce fees.
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O’Connor noted that industries with frequent turnover make it hard for those sponsors to plan for lifetime income products. “Employee tenure is a structural challenge,” said O’Connor, agreeing that portability is a big issue.
Click here to read the full article on the Pensions & Investments site.
NEPC Names New Partners and Principals Closing out Historical Year of Strategic Growth
Boston, MA – December 17, 2024 – NEPC, LLC, a leading investment consulting firm, is proud to announce the election of three new Partners and the designation of 10 new Principals, effective January 1, 2025. These individuals have made significant contributions to NEPC’s success and will continue to drive the firm’s future growth and leadership in the investment consulting industry.
The new Partners are:
- Tom Cook, Senior Consultant
- Alison Lonstein, Senior Consultant
- Matt Maleri, Senior Consultant
The new Principals are:
- Jennifer Appel, CFA, Senior Investment Director
- Larissa Davy, Senior Investment Director
- Colin Hatton, CFA, CAIA, Senior Consultant
- Linda Hoffman, JD, Senior Legal Counsel
- Alisyn Hoole, CAIA, Senior Director of Consulting Analytics and Development
- Janis Kane, CFA, FSA, EA, Director of Liability Driven Investing Solutions
- Kevin Lau-Hansen, Head of Operational Due Diligence
- Andrew Pettersen, CFA, Senior Investment Director
- Jay Regan, Chief Compliance Officer
- Sean Vogt, CAIA, CIPM, Director of Performance Measurement
“This year’s class of Partners and Principals reflects NEPC’s dedication to cultivating exceptional talent and providing best-in-class service to our clients,” said Mike Manning, Managing Partner at NEPC. “In a year defined by milestones, including our recent strategic partnership with Hightower, these promotions highlight our focus on continuity, innovation, and a client-first ethos. We are confident these leaders will help shape NEPC’s future while maintaining the values that have made us a trusted partner to our clients.”
The appointments come during a year of strong growth and strategic advancement for NEPC. The firm’s dedication to fostering internal talent remains central to its strategy of delivering tailored investment solutions and thought leadership to a diverse range of clients.
For more information about NEPC and its services, please visit nepc.com.
About NEPC
NEPC, LLC is a leading investment consultant, private wealth advisor, and OCIO provider, serving over 400 retainer clients and $1.7 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our client-centric model, NEPC builds forward-looking investment portfolios for institutional investors, ultra-high-net-worth individuals and families. To learn more visit nepc.com.
Responsible Investor: Are European Fund Houses Coming for US Managers' ESG Lunch?
NEPC’s Endowment and Foundation Team Leader, Krissy Pelletier, was quoted in Responsible Investor to speak on how asset owners are thinking about sustainability considerations and its role in their manager selection. View the article on Responsible Investor’s site here.
US asset owners look further afield as local managers lose appetite for sustainability.
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Krissy Pelletier, partner and head of endowment and foundation team at consultancy NEPC, says US asset owners are getting “more and more savvy and looking much further and much deeper”.
“Even investors who come to the table with strictly the investment-opportunity lens have gotten more savvy on digging deeper when there is a sustainability-minded find, asking questions about the expertise of the team or additional resources that a firm is utilising,” she adds.
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According to Pelletier, there may have to be “hard choices” if underperformance of sustainable or ESG strategies impacts the spend rate of one of her clients or the work it is aiming to carry out.
However, she notes that many asset owners are being patient as some ESG strategies underperform and are willing to try and understand the underlying causes.
Click here to continue reading the full Responsible Investor article.
Capital Allocators: Asset Management Consolidation
NEPC’s Tim McCusker was featured on the Capital Allocators Podcast to discuss NEPC’s recent merger with Hightower Holdings and provide an inside look at dealmaking in asset management. Listen to the podcast on Capital Allocators here.
Bloomberg: Manufacturers Caught Between Trump Tariff Bluster and Reality
NEPC’s Head of Asset Allocation, Phillip Nelson, speaks on the the future of American tariffs as a new administration rolls in. View the article on Bloomberg’s site here.
It’s possible that Donald Trump’s latest tariff threats on Mexico and Canada are just negotiating bluster. It’s also possible that he’s serious. Either way, US manufacturers are going to get caught in the middle.
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“The president has latitude to carve out exemptions by individual product code to more specifically target Chinese manufacturers that have invested in Mexico or other areas of national priority without crippling the US supply chain,” said Phillip Nelson, head of asset allocation at NEPC, an investment consultant that oversees $1.7 trillion of assets.
Bloomberg Radio: With Guest Sarah Samuels
NEPC’s Sarah Samuels was featured on the Bloomberg Intelligence Podcast for her outlook on private markets in 2025. Listen to the podcast on Bloomberg here.
Pensions & Investments: New Crop of Embedded Annuity Target-Date Funds Seen as a Way Station — Not a Final Stop, Experts Say
NEPC’s Bill Ryan was recently quoted in an article by Pensions & Investments which is focused on increasing returns to 401(k)s through embedded annuity options. View excerpts below or read the full article on the Pensions & Investments site here.
Target-date funds coming to market this year with embedded annuity options could mark a key step forward in the industry’s long slog to help 401(k) participants stretch their retirement savings into needed income for life.
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Bill Ryan, a partner and head of defined contribution solutions with Boston-based investment consultant NEPC, said he remains skeptical, predicting that no more than 10% of participants will likely be in the market to buy an annuity.
“There’s a higher probability, if they engage at retirement, they take all the money out, move it to their own personal wealth adviser, who then may facilitate something similar,” Ryan said. In the defined contribution construct, “we’re missing the human wealth manager that actually helps the individual trigger the annuity. There’s nobody holding the hand of the participants to successfully facilitate that transaction … and that human behavior is where I think this breaks down.”
Instead, Ryan predicted, passive target-date funds with elevated equity exposures could prove to be the “killer app” in the retirement space, allowing participants to build up bigger 401(k) retirement pools over a working life of 40 years or more which they can then rely on for a “paycheck” in retirement, without the need of a guaranteed income crutch.
Participants who have undersaved, meanwhile, could be worsening their situations by paying an insurer a premium to get a guaranteed income stream. “They actually could put themselves in a bigger deficit,” he said.
Click here to read the full article on the Pensions & Investments site.
Bloomberg: CEOs Brace for the Chaos of Another Four Years of Trump
NEPC’s Head of Asset Allocation, Phillip Nelson, speaks on the potential implications of tariffs on China in a new Trump era. View the article on Bloomberg’s site here.
Large corporations crave predictability, and the primary economic policy of Donald Trump is chaos. Whether it’s the threat of steep new tariffs or retribution, chief executive officers and their carefully drawn plans will once again be at the whims of a leader who’s emboldened to reorder the economy.
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There’s good reason to believe that many of Trump’s comments are bluster and that he’s more likely to target Chinese companies than American ones importing components from abroad. “He won’t want to be held responsible for the closure of a Midwestern factory when the operator can no longer afford to get the parts it needs, says Phillip Nelson, head of asset allocation at NEPC, an investment consultant that oversees $1.7 trillion of assets. Then again, Trump won’t have the prospect of reelection to think about this time.”
Pensions & Investments: Who Watches the Watchmen? Independent Evaluators Horning in On Consultants' Trusted Adviser Monopoly
NEPC’s Mike Manning & Steve Charlton have been featured in an article in Pensions & Investments for their insights on the OCIO industry and third-party evaluators. View excerpts below or read the full article on the Pensions & Investments site here.
For decades, investment consulting firms have maintained their perch as the prime gatekeepers of institutional portfolios, advising asset owners on manager selection, asset allocation and portfolio construction.
But with consultants, in their guise as outsourced CIOs, now almost universally bringing their own dogs to the money management fight, the question of who can gatekeep the gatekeepers is taking on growing relevance.
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The hope, said Michael P. Manning, managing partner of Boston-based investment consultant and OCIO firm NEPC, “is that they’re going to put us in front of organizations where there’s a good cultural or philosophical fit, as opposed to organizations … who just send out 20 RFPs,” without a deep understanding of how a firm such as NEPC works and its relative strengths.
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Steve Charlton, a partner and head of client solutions with NEPC, said with third-party evaluators now accounting for roughly a third of the OCIO searches NEPC responds to, the investment consultant — with $1.66 trillion in advisory assets as of June 30 and over $100 billion in OCIO mandates — is making “a concentrated effort” to engage with those firms, reflecting their rising profile as “the interface between the firm and the end client.”
Third-party evaluators ask a lot of challenging questions, Charlton noted, which in turn can result in a more robust process than searches that don’t involve those players. They are effectively helping clients do a better job fulfilling their fiduciary duty, he said.
Click here to read the full article on the Pensions & Investments site.