Key Takeaways
- • Investment consultants flag AI-linked concentration risk spanning both equity and credit portfolios, as issuance funding data centres, power and the wider AI build-out now sits within buy-and-maintain credit holdings, according to Cartwright Pension Trusts' Yona Chesner.
- • Isio CIO Barry Jones warns that traditional correlation assumptions may understate losses if an AI setback hits equity and debt exposures to the same companies simultaneously.
- • DB schemes pursuing insurer buyouts will need more liquid portfolios, while schemes not transacting imminently may find illiquidity premia better rewarded than in recent years, Chesner says.
- • Broadstone's Andy Knight-Stephens argues many DB schemes still treat climate as a reporting exercise rather than a genuine investment risk, and calls for systems-based scenario analysis.
- • Zedra's Alan Greenlees flags domestic gilt-market risk under the new Labour government, and EY-Parthenon data published 18 August shows geopolitics and policy change drove most UK DB sponsor profit warnings in H1 2026.
Summary
As pension fund investment committees prepare to reconvene after the summer, consultants quoted in Pensions Expert identify AI concentration, endgame liquidity, climate risk and geopolitics as priority agenda items. The AI theme has dominated equity and bond markets in 2026, with SpaceX's record IPO at a valuation of approximately $1.8trn and a forthcoming Anthropic listing that some reports suggest could reach $2trn.
On AI, Mercer's James Lewis urges trustees to understand whether thematic concentrations are deliberate or a by-product of other decisions. Cartwright's Yona Chesner notes that concentration has moved into credit, as much of global investment-grade issuance funding data centres, power and AI infrastructure sits in buy-and-maintain portfolios. Isio's Barry Jones says reducing exposure to mega-cap technology stocks has not paid off in recent periods, but the concentration risk remains, and warns that models may overstate diversification. First Actuarial's Adam Michaels suggests an equity portfolio with less emphasis on these stocks can still meet return needs.
For DB schemes approaching endgame, Chesner says insurer-transacting schemes will hold far more liquid portfolios, while others should take a deliberate rather than reflexive approach to illiquidity. First Actuarial's Michaels cautions that illiquid funds may face simultaneous redemption requests from multiple DB clients and may have introduced restrictive provisions. Mercer's Lewis notes that running on, surplus management and buyouts each require different portfolio construction.
On climate, Broadstone's Andy Knight-Stephens, citing record temperatures, drought and wildfires across England and Wales, argues climate should be treated as a genuine investment risk and assessed for how shocks propagate across inflation, growth, rates and credit. Zedra's Alan Greenlees highlights geopolitical risk from Middle East and Ukraine conflicts, along with domestic gilt-market sensitivity to the new Labour government's fiscal policy. EY-Parthenon data published 18 August shows geopolitics and policy change were the main triggers of profit warnings from UK-listed DB sponsors in the first half of the year. Knight-Stephens also warns that government bonds may not reliably diversify growth assets under persistent structural change.
On AI, Mercer's James Lewis urges trustees to understand whether thematic concentrations are deliberate or a by-product of other decisions. Cartwright's Yona Chesner notes that concentration has moved into credit, as much of global investment-grade issuance funding data centres, power and AI infrastructure sits in buy-and-maintain portfolios. Isio's Barry Jones says reducing exposure to mega-cap technology stocks has not paid off in recent periods, but the concentration risk remains, and warns that models may overstate diversification. First Actuarial's Adam Michaels suggests an equity portfolio with less emphasis on these stocks can still meet return needs.
For DB schemes approaching endgame, Chesner says insurer-transacting schemes will hold far more liquid portfolios, while others should take a deliberate rather than reflexive approach to illiquidity. First Actuarial's Michaels cautions that illiquid funds may face simultaneous redemption requests from multiple DB clients and may have introduced restrictive provisions. Mercer's Lewis notes that running on, surplus management and buyouts each require different portfolio construction.
On climate, Broadstone's Andy Knight-Stephens, citing record temperatures, drought and wildfires across England and Wales, argues climate should be treated as a genuine investment risk and assessed for how shocks propagate across inflation, growth, rates and credit. Zedra's Alan Greenlees highlights geopolitical risk from Middle East and Ukraine conflicts, along with domestic gilt-market sensitivity to the new Labour government's fiscal policy. EY-Parthenon data published 18 August shows geopolitics and policy change were the main triggers of profit warnings from UK-listed DB sponsors in the first half of the year. Knight-Stephens also warns that government bonds may not reliably diversify growth assets under persistent structural change.
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