Every defined benefit pension scheme has its own objectives, liabilities, funding position, cashflow requirements and sponsor circumstances.
We design and manage portfolio around each scheme’s objectives and required outcomes, rather than allowing conventional asset-class boundaries or market benchmarks to dictate the strategy.
Our objective is to improve funding resilience, helping schemes focus on paying member benefits over the long term.
Outcome-led, whole-portfolio thinking
We believe investment strategy should begin with a clear understanding of the scheme’s destination and the risks inherent in its liabilities.
From there, our One Portfolio approach considers each investment according to the role it can play within the total portfolio. That may include delivering cashflows, maintaining liquidity, managing liability-related risks, providing diversification or contributing to required returns.
Our approach moves beyond rigid allocation buckets. It focuses attention on how investments work together and whether the overall portfolio remains aligned with the scheme’s objectives as circumstances change.
Our Investment beliefs
1. Start with the destination
Investment strategy should be designed around the result a scheme needs to achieve.
That requires an integrated understanding of:
- The scheme’s liabilities and projected benefit payments
- its funding position and required return
- the strength and visibility of the sponsor covenant
- Its cashflow and liquidity requirements
- Its governance capacity
- Its chosen long-term destination
We do not believe there is a single strategy that is right for every scheme. The appropriate balance of return, risk, liquidity and flexibility depends on each client’s circumstances.
2. Considering the total portfolio
We assess investments according to their characteristics and intended role, rather than relying solely on an asset-class label.
At total-portfolio level, we consider:
- Expected return and income
- Downside risk
- Liquidity and collateral characteristics
- Sensitivity to interest rates, inflation and other market factors
- Exposure to common sources of uncertainty
- Interaction with the scheme’s liabilities and other investments
Benchmarks remain useful for portfolio construction and manager assessment, but the ultimate measure is whether the portfolio is supporting the scheme’s objectives.
3. Taking risk selectively
Investment risk should be taken deliberately and for a clear purpose.
We generally seek to reduce or hedge risks where we do not expect to be rewarded for retaining them, including liability-related risks where appropriate. We take rewarded risks where we believe they can contribute efficiently to the returns the scheme requires.
Risk and return relationships change through time, so valuation and the level of compensation available for accepting risk also matter. A higher level of uncertainty does not automatically make an investment unattractive if that uncertainty is appropriately reflected in its price.
4. Diversify the underlying drivers of outcomes
Diversification is more than owning different asset classes, sectors or regions.
Different investments may still be exposed to the same economic, financial or geopolitical development. We therefore consider the underlying factors that could affect investments together, as well as their individual characteristics.
Effective diversification should reduce reliance on any one investment, manager, return driver or source of uncertainty, improving the portfolio’s ability to withstand a range of market environments.
5. Liquidity creates flexibility
A long-term investment horizon can provide access to a wider range of opportunities, including less-liquid assets. However, long-term investing does not remove the need for liquidity.
We believe portfolios should maintain sufficient liquidity to:
- Meet expected benefit payments
- Support collateral requirements
- Respond to changing market conditions
- Avoid forced selling where possible
- Take advantage of attractive opportunities when they arise
Illiquid investments should offer sufficient expected benefit to compensate for the loss of flexibility, with particular care around assets that do not naturally repay capital over time.
6. Governance is an investment advantage
Good decisions require clear accountability, appropriate expertise and an operating model that can respond when circumstances change.
We believe effective governance should:
- Give decision-makers clear responsibilities
- Provide access to relevant information and expertise
- Establish appropriate risk parameters
- Allow timely action within an agreed framework
- Support constructive challenge and oversight
The aim is not to react to every market movement. It is to ensure that significant developments can be assessed and acted upon in a disciplined way.
7. Long-term perspective can create opportunity
DB pension schemes can benefit from their ability to invest over long periods. Their scale, governance and long-term cashflows may provide access to investments and strategies that are not available to all investors.
We do not believe consistent short-term market timing provides a dependable source of advantage. However, patient investors with sufficient liquidity may be able to take advantage of market dislocations, attractive valuations and opportunities that require a longer investment horizon.
8. Active management should have a clear purpose
Markets can contain inefficiencies created by structural constraints, benchmark concentration, investor behaviour or differences in access to information and expertise.
We use active management selectively where we believe skilled managers can:
- Assess individual investments more effectively
- Respond to changing conditions
- Navigate complex or less-efficient markets
- Manage downside risks
- Identify opportunities that benchmarks may overlook
We look for appropriate resources, flexibility, robust risk management and evidence of how managers have operated through challenging environments. Active-manager risk should also be diversified, recognising that no manager will outperform in every market environment.
9. Resilient investment decision-making
The world has become more uncertain. Geopolitical instability, inflation, energy security, climate change, technological disruption and shifting social expectations are all shaping the environment in which pension schemes operate. For long-term investors, the challenge is not to predict every future shock, but to build portfolios that can withstand and adapt to a wide range of possible outcomes.
Our Resilience Investment Framework provides a structured way to consider how portfolios may respond to changing sources of uncertainty. It supports better questions, more focused analysis and clearer prioritisation while keeping the scheme’s long-term purpose at the centre of investment decisions.
A philosophy shaped by practical experience
Our investment philosophy has developed through the practical experience of managing the funding and investment requirements of large, mature DB pension schemes.
It combines liability awareness, whole-portfolio thinking, selective risk-taking, liquidity management, open-architecture manager partnerships and disciplined governance.
The result is an approach designed to remain focused on each scheme’s objectives while retaining the flexibility to respond as circumstances change.
To find out more about how Brightwell supports resilient long-term investment strategies, please contact our investment team: hello@brightwellpensions.com. A dedicated member of our team will be in touch.
Disclaimer:
The information provided was correct as at 24th of July 2026 and BTPSM trading as Brightwell shall be under no obligation to notify you of any changes to the information or otherwise to update the information after this date. It is intended for information purposes only and does not constitute an offer, recommendation or solicitation to buy securities or derivatives products. Any reliance you place on this information is at your own risk.
The investment strategies that BTPSM trading as Brightwell use are subject to normal market fluctuations and the risks associated with investing in international securities markets. Therefore the value of investments and the income from it may rise as well as fall and investors may not get back the amount they originally invested.
*Whilst Brightwell endeavours to deliver Value for Money in all activities, any potential cost savings should be independently validated through appropriate sources.
Explore more within Funding & Fiduciary Services
Funding & Fiduciary Services
Running a defined benefit pension scheme requires an integrated understanding of its assets, liabilities, cashflows, funding position and sponsor circumstances. Brightwell brings these elements together through bespoke funding, investment and fiduciary solutions designed around each client’s objectives, while retaining flexibility as their long-term destination evolves.
Take me there – “Funding & Fiduciary Services”
Resilience Investment Framework
Geopolitical instability, inflation, energy security, climate change, technological disruption and shifting social expectations are all shaping the environment in which pension schemes operate. For long-term investors, the challenge is not to predict every future shock, but to build portfolios that can anticipate, withstand and adapt to a wide range of possible outcomes.
Take me there – “Resilience Investment Framework”