UK Money News
8th July 2008
Pension schemes shift away from equities
Final salary pension scheme funds are reallocating their assets from equities to bonds to limit their exposure to volatility in the markets, new figures show.
According to Aon Consulting, over the last 12 months some 46 per cent of British defined benefits schemes (DBs) had moved fund from equities to bonds.
The poll also uncovered a trend for asset managers to adopt a wider range of diversifying asset classes.
This strategy is intended to cut exposure to risk without compromising returns.
Daniel Peters, an investment consultant and actuary at Aon, said: "It's no surprise that as pension schemes mature and trustees become increasingly risk aware, nearly half have moved some part of their growth portfolio into matching assets.
"To reduce volatility further, growth assets require diversification away from equities. Alternative assets - such as funds of hedge funds - that have low correlations with more traditional investments can be used to target a similar level of return to equities, but with lower volatility."
Aon surveyed 100 managers of DBs for its research.
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