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Co-operative fund on diversification streak

UK - The new £5.5bn career average Co-operative Group Pension Scheme is adjusting its equity/bond split in favour of diversification into currency, commodities and infrastructure.

The group, which merged its three schemes - the £2.4bn group scheme, the £1.9bn CIS scheme and the £400m Co-operative Bank scheme - to create one of the UK's largest schemes in April last year, has cut down its equity holdings from 62% to 45% in recent months in a review of its investment strategy.

Speaking at the pension plan financial risk 2007 conference in London today, Alan Murphy, the group's director of pensions, said: "We are looking to diversify into a number of areas such as currency, commodities and infrastructure over the next couple of months."

Calling the upcoming diversification a "key stage", Murphy said the fund has also looked at 16 potential asset classes, though he declined to reveal which asset classes these are.

It is part of the scheme's de-risking approach, having recently decided to adopt a liability driven investment (LDI) approach.

"The decision we need to take is what our overall allocation to return seeking assets will be," added Murphy, who pointed outin any case this will not go below 20%.

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