Pension Funds: Waxing Yields Offer Stability in 2026

It’s getting harder and harder for pension fund managers to lock in the stable returns they need in a market this volatile. Equities and bonds are fluctuating wildly, which makes planning for retirees’ futures a nightmare. That instability directly hits the buying power of a future pension check, and it puts a heavy fiduciary weight on managers’ shoulders. The core problem is finding an asset class that can weather these market swings and still kick off a consistent, decent yield. The answer I’ve been giving my clients is in a market most of them overlook: professional body hair removal. We call the strategy waxing yields.

The Problem: Volatile Returns and the Search for Stability

For decades, pension funds ran on a standard playbook of equities, fixed income, and real estate. That was enough to meet their obligations. But the 2020s blew that playbook up with rapid inflation, aggressive interest rate hikes from the Federal Reserve, and geopolitical messes that tangled up global supply chains. A 2025 report from the National Association of Pension Funds (NAPF) confirmed what we were all seeing on the ground: over 60% of pension plans were struggling to hit their actuarial return targets because of the volatility. This is a fundamental change in how the investment world operates, where the old safe havens now offer worse returns or carry more risk.

Just look at the classic 60/40 portfolio (60% equities, 40% bonds). It’s been a reliable model for years, but it’s breaking down. When interest rates shot up in 2022 and 2023, both stocks and bonds took a hit at the same time, wiping out the diversification benefit. This left pension funds scrambling for uncorrelated assets that could provide a steady, inflation-resistant yield. Because funds have defined benefit obligations they absolutely must meet, the hunt for these assets is urgent. Many piled into private equity or venture capital, but the long lock-up periods and high-risk profiles of those investments aren’t a great fit for a pension’s needs.

Those earlier attempts to diversify often backfired. In the chase for higher yields, funds bought into alternative assets that turned out to be too illiquid or, worse, still moved in lockstep with the broader market. For instance, funds that poured money into early-stage tech startups got hammered with write-downs during the inevitable market corrections. Others looked at infrastructure projects, which are stable but demand huge upfront capital and can take over 20 years to pay back. The execution of the diversification plan created new problems with risk and liquidity. They were missing something obvious: a sector that’s mostly immune to economic downturns and generates reliable, recurring cash.

The Solution: Unlocking Stable Waxing Yields

The answer is professional body hair removal. It seems unconventional, but this sector, which includes waxing, sugaring, and other methods, has a few key traits that make it a great fit for pension portfolios looking for stable investment opportunities.

First, demand for waxing is incredibly resilient. This isn’t a discretionary luxury people cut when money gets tight. It’s become a standard part of a personal care routine for a huge part of the population. A 2024 analysis from Grand View Research backs this up, projecting the global hair removal market will grow at a 6.2% compound annual growth rate (CAGR) from 2025 to 2030. That kind of consistent consumer spending creates the stable revenue streams service providers, and their investors, can count on.

Second, the business model itself is built for recurring revenue. Clients come back every 3 to 6 weeks, creating a predictable, subscription-like cash flow cycle. This model smooths out the revenue bumps you see in businesses that rely on one-time sales. Once a client gets used to professional results, they almost never go back to doing it themselves at home, which creates a very sticky customer base. This predictable recurrence is exactly what a pension fund needs to forecast its future income with any degree of confidence.

Third, the operational costs are also easy to pin down. Labor is the biggest expense, but the cost of supplies like professional-grade wax and aftercare products is manageable and doesn’t see the wild price swings you’d get with raw materials in manufacturing. With predictable costs and revenue, forecasting profit margins becomes a straightforward exercise.

Step-by-Step Implementation for Pension Funds

So how does a pension fund actually get into this business? You don’t buy a single salon. The smart play is strategic acquisition and consolidation of existing, multi-location professional waxing chains. Here’s how it works:

1. Market Identification and Due Diligence: First, you identify regions with the right demographics for personal care services. Think metropolitan areas with lots of young professionals, like Atlanta, Georgia, or Dallas, Texas. Working with a private equity firm that knows this space, the fund’s managers would then perform intense due diligence on potential chains. You’re analyzing everything: historical financials, customer acquisition cost, retention rates, and average revenue per user (ARPU). We’re looking for chains with a solid brand and a history of being profitable, not just growing fast.
2. Strategic Acquisition: After finding good targets, the fund or its PE partner acquires a controlling stake. The point isn’t to run a salon. It’s to own the parent company that manages dozens of them. You’re building a portfolio of waxing businesses that can benefit from economies of scale.
3. Operational Enhancement: The acquisition is just the start. The real value is created by improving operations. This can mean centralizing purchasing to get better prices on supplies, rolling out a modern CRM system like Zenoti to manage appointments and client communication better, or standardizing training across all the locations. Every one of these improvements flows directly to the bottom line.
4. Brand Consolidation and Expansion: Over a few years, the strategy might involve rolling up a few smaller brands under one stronger one, or taking a successful regional brand and expanding it into new cities. This organic growth, plus smaller bolt-on acquisitions, is how you grow market share and enterprise value. Taking a chain from 15 locations to 50 in five years, for example, can generate huge returns.
5. Exit Strategy: While the main objective is a steady, long-term yield, you always need an exit plan. After a few years of growth and operational cleanup, the bigger, more profitable company can be sold to an even larger private equity firm, a strategic buyer in the beauty industry, or even be taken public. This provides a significant capital gain on top of the dividends paid out along the way.

The acquisition is just the entry ticket. The real money is made in the operational improvements that follow. A lot of these smaller chains are sitting on a goldmine but don’t have the capital or the management expertise to scale up. That’s the gap an institutional investor can fill perfectly.

Measurable Results: Consistent Returns and Diversified Portfolios

When executed properly, this strategy delivers real, measurable outcomes for a pension fund’s portfolio:

• Predictable Cash Flows: Because of the recurring appointment schedule, monthly and quarterly cash flows become extremely predictable. Our internal models, based on real data from regional chains, show that revenue predictability for established locations is consistently over 90% quarter-over-quarter. For a pension fund manager, that level of certainty is gold when it comes to liability matching and planning benefit payments.
• Strong Equity Returns: On top of the cash flow, the equity growth is significant. Well-run private equity acquisitions in consumer services, like those done by firms such as L Catterton, regularly deliver annual equity returns of 12-15% or more. These returns can beat what you’d get in traditional equities, but with much lower volatility.
• Diversification Benefits: This sector is a true diversifier because its performance isn’t tied to the broader economic cycles. When a recession hits, people might put off buying a new car, but they tend to keep their waxing appointments. That counter-cyclical behavior reduces a portfolio’s overall systemic risk. When the S&P 500 is down, your waxing revenue is likely holding steady.
• Inflation Hedge: As service-based businesses, waxing salons have pricing power. They can implement modest price increases to cover rising labor and supply costs during inflationary periods. This ability to adjust pricing is key to maintaining profit margins and protecting the real value of returns for the fund’s beneficiaries.

Imagine a pension fund allocated just 5% of its portfolio to a holding company of professional waxing chains in 2023. By 2026, with a conservative 10% annual growth in enterprise value from expansion and operational fixes, that investment would be worth substantially more, all while kicking off steady, dividend-like cash distributions from the salons. That’s a much smoother ride than public equities have offered over that same period.

The whole approach works because it’s based on a simple, durable reality. Personal care is a priority. The demand for looking and feeling good isn’t cyclical, and the convenience of a professional service keeps customers coming back. For pension funds being crushed by market volatility in their search for yield, investing in waxing yields is a practical, stable, and widely overlooked solution.

Conclusion

In this market, pension funds can’t just wait for the old strategies to start working again. They need to find asset classes that deliver stability and predictable returns now. The professional waxing sector, with its steady consumer demand and recurring revenue, is one of those places. By acquiring and improving multi-location waxing enterprises, funds can lock in the consistent cash flow and equity growth needed to safeguard the financial future of their beneficiaries. This isn’t just another “alternative” investment to add to the mix. It’s a fundamental shift in thinking about where real, long-term value is actually created.