UK pension funds increase private equity, hedge fund investment over two years

The survey, which received responses from 294 defined benefit funds with £450bn in assets, found that pension funds are continuing to move their assets out of equities and into other investment classes. The percentage of all pension fund assets invested in equities has fallen to 49.9 per cent this year from 59.7 per cent in 2006, with UK equity investment down to 21.1 per cent from 28.2 per cent.

Pension funds have also increased their investment in hedge funds to 1.9 per cent in 2008 from just 1.2 per cent in 2007 and one per cent in 2006.

David McCourt, NAPF policy advisor on investment and governance, said, 'The pattern of UK pension fund investment continues towards greater diversification as a means of better risk management and reducing the impact of significant volatility in world equity markets. If volatile equity markets persist it would be likely that this trend will continue in 2009.'

The NAPF is a UK body providing representation and other services for those involved in designing, operating, advising and investing in pensions. The organisation represents 1,200 pension schemes.

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