Management Consulting

Aon has observed a significant shift in the investment strategies of UK defined benefit (DB) pension schemes, driven by market volatility and macroeconomic uncertainty. This has led to an increased interest in hedge fund investments as a means to enhance portfolio resilience and drive returns. Over the past 18 months, many pension schemes have improved their funding levels and are now focusing on their endgame strategies, which include planning for buyouts or running-on. This shift has prompted a reevaluation of investment horizons, with many schemes moving away from illiquid investments towards more agile hedge fund solutions. Aon's hedge fund solution has experienced a notable increase in new mandates, with assets under management rising by over a third in the past year. This solution is tailored to deliver steady absolute returns, provide diversification against equities and credit, and offer downside protection. It has proven effective across various market conditions, aligning with the needs of pension schemes as they assess their funding and future strategies. Additionally, there is a growing emphasis on liquidity, cost, and ESG integration, which are critical for institutional allocators. Aon’s approach has made its hedge fund solutions increasingly attractive to pension schemes and other investment clients, such as endowments and foundations, who are also seeking to navigate the current market landscape.