-
63.8% seeking greater diversification of assets to navigate market volatility (up from 47.6%)
Baring Asset Management's (Barings) poll of UK pension schemes1 has revealed that UK pension professionals are increasingly seeking greater diversification of assets to assist in mitigating continuing market volatility. The research, conducted online among professionals involved with the investment management of a UK private or public pension scheme, found that the number of respondents who cited greater asset diversification as a key tactic for navigating market volatility has increased significantly in the past six months, from 47.6%1 to 63.8%2.
Reviewing the investment portfolio more regularly is another tactic employed by respondents in an attempt to protect against volatility, with more than half choosing this option (51.1%), up from 42.9% in the last survey, while 34% are shifting asset allocations to multi asset products, up from 26.2%. Indeed, according to the survey results, multi asset strategies continue to find favour among pension professionals with two thirds (68.8%) investing in targeted return or diversified growth strategies.
The research found that almost two-thirds of respondents (64.6%) had recently changed the allocation of their fund. The most popular reasons for making these changes are to reduce the volatility of the fund (50%) and to reduce the correlations of existing assets (42.3%).
Andrew Benton, Head of UK and International Institutional Sales at Barings commented, "This research shows that UK pension funds continue to be concerned with the need to manage volatility and diversify assets in order to protect against significant losses. We continue to see great demand for our suite of multi asset products. The Baring Dynamic Asset Allocation Fund, the vehicle for our Defined Benefit clients, has now reached an AUM of £4.7bn (as at 30 April 2012) having launched in January 2007."
The biggest macro-economic challenges to investment growth over the next six months continue to focus on European debt concerns, with this being a worry for 87.5% of pension professionals. Other concerns include rising tensions in the Middle East (47.9%) and the prospect of a second banking crisis (41.7%).
Emerging Asia remains the region that investors expect to offer the biggest potential for equity gains over the next ten years, although the number is down from 62.0% to 54.2%. Frontier markets have stepped into the limelight for a number of pension professionals, with 20.8% of respondents in the latest survey identifying these markets as having the greatest potential going forward.
|
