DWS launches structured credit solution for DB pension plans

The German asset manager said the launch of its Secured Income Fund would address underfunding problems for smaller DB schemes by providing a diversified, stable, and long-term income

DWS has launched a private and structured credit solution for small- to medium-sized defined benefit pension schemes.

The German asset manager said the launch of its Secured Income Fund would address underfunding problems for smaller defined benefit (DB) schemes by providing a diversified, stable, and long-term income.

Assets including infrastructure debt, real estate debt, direct lending, asset-backed securities, collateralised loan obligations, and leveraged loans will be included in the fund.

DWS said it would offer enhanced security of income through the single pooled fund, the type of which some smaller DB schemes may have been historically restricted from investing in due to minimum size or governance requirements.

French alternative asset manager Tikehau Capital will partner with DWS on growth initiatives for the fund.

This new investment strategy meets the objectives of both Tikehau Capital and DWS to align our respective expertise in alternative investing and to offer bespoke financial solutions and sources of secure income to institutional investors, said Tikehau Capital chief executive Frédéric Giovansili.

DWS head of structure income Marcus Herbig added: We are proud to launch this solution to help our pension clients focus on their long term obligations and to ensure they have a robust future funding plan. Secured income assets are an invaluable part of the de-risking journey for DB pension plans with negative cashflows which still require returns in excess of those offered by UK government bonds.

This solution can help close funding deficits whilst simultaneously helping maturing pension funds meet their need for income to pay benefits, Herbig said.

It comes after DWS joined with the Asset Management Exchange in February to launch an investment solution which allows schemes in pooled funds to express their stewardship preferences.