Millions of Workers Auto-Invested into Higher Risk Bonds

NEST, the government's default pension scheme for auto-enrolled workers has announced it will be investing in emerging market bonds for the first time

Emma Wall 3 March, 2016 | 11:00AM
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Millions of workers enrolled in their workplace pension will soon be invested in higher risk bonds issued in emerging markets. The Government run default scheme NEST, which runs pension plans for more than 69,000 companies with a total of 2.8 million employees, has announced plans to include emerging market bonds in their multi-asset portfolios.

Hunt for Yield Outside the UK

NEST already invested in government and corporate bonds issued in the UK, US and Europe as well as global equities, cash and property. But investing in emerging market bonds is a first for the pension provider. Emerging market bonds are widely considered more risky than their developed market counterparts; there is a higher risk of default with these types of fixed income, but the investor is generally rewarded for this risk with a higher rate of return.

Mark Fawcett, NEST chief investment officer, said that the new mandate was in line with members’ long-term investment horizon.

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Emma Wall  is former Senior International Editor for Morningstar