Of the many alternative investments outside stocks and bonds that pension funds can buy, a few are putting retirement money into music copyrights.
RPMI Railpen, the manager of one of the largest and oldest UK pension funds, is leading a $345 million investment in a fund rolled out Monday by Kobalt Capital, the subsidiary of music royalties collection and technology company Kobalt.
“With low expected returns from many traditional asset classes, we are prepared to allocate in alternative investments that can help us to pay members’ pensions well into the future,” Craig Heron, deputy investment director, RPMI Railpen, told CNBC this week in an email.
Through the fund, Railpen buys music copyrights and receives royalties collected by Kobalt.
“This is an innovative investment opportunity that offers the type of long-term returns that we need to meet our mission,” Heron said. “As a truly long-term investor we see our relationship with Kobalt as being an important one for us in the future.”
Founded in 2000, Kobalt counts artists such as The Chainsmokers, Miles Davis and Sam Smith as clients, and has developed software allowing clients to track their earnings from Spotify and other streaming services in real time. The company has attracted investors such as Michael Dell’s family fund and Hearst Entertainment.
In October, Google Ventures founder Bill Maris joined Kobalt’s board and led a $14 million investment round through his new fund, Section 32.
Kobalt founder and CEO Willard Ahdritz said that as of the beginning of November, Kobalt has extracted roughly $3 billion…