Key statistics & headline takeaways
- From the pool of UK pension scheme respondents, 84% expect institutional investors to increase their exposure to social care
- Eighty-eight percent of UK pension schemes believe commitments and pledges from local authorities and government to social care provision demonstrate the strong defensive attributes of the sector
- Respondents are in consensus that investing in social care strengthens ESG credentials, and 54% believe the social care sector is poised to benefit from institutional investors shifting focus to the ‘S’ (social) aspect of ESG investing
The first Downing LLP social care report, ‘Emerging Trends in Social Care Investing’, explores the latest perspectives of 50 UK pension funds, which collectively manage about £102bn.
On the up
This is an independently commissioned report that gauges key institutional themes and reveals a surge in interest in social care - with UK pension schemes poised to increase exposure to the sector. The report also identifies the hierarchy of reasons behind the elevated interest into the sector and why institutional allocations are growing.
One major motivation for increased exposure by institutions is the emergence of the older generation expressing willingness to pay privately for good quality healthcare. Other key reasons include the UK’s profound demographic challenges and the necessity for improved diagnosis of needs.
Evolving care - ESG ready
The report indicates that the social care sector is under pressure from the weight of growing demand, funding shortfalls and the lack of modern, fit-for-purpose accommodation. This has presented an opportunity for social care asset managers to more broadly align with institutions focused on ESG and impact investing.
Indeed, 100% of the respondents surveyed agree investing in social care supports ESG credentials. The report also shows the ESG story in social care investing is evolving with more of an emphasis on the ‘S’.
The report also examines the regulatory backdrop. The findings show UK pension schemes interviewed expect the level of regulation focusing on the social care market, and the associated checks and systems put in place to ensure the sector provides quality care, to improve over the next five years.
Finally, while the tailwinds for the sector are clear, the report's deeper analysis explains that schemes entering the market need to be wary of adopting a homogenous and generalist approach. Investors need to develop an understanding of factors influencing different types of care, including local supply and demand factors.
If you would like to read the report and the full analysis, please click the download button below.