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  • Funds review diversification and management

GLOBAL - Opinion polls suggest pension fund managers globally are questioning the use of diversification, just as funds are re-evaluating their investment management policy.

Pension consultant Hewitt said from the 100 pension fund managers it polled during a recent fund seminar, more than 40% felt the combination of an extreme financial crisis and greater inter-connection between markets and asset classes had "negatively impacted the rationale for diversification in the short-term."

Moreover, fund managers are more divided than in previous years on which asset class will perform best over the next 12 months, the consultant has found.

Similarly, asset manager SEI today said pension schemes globally are also re-evaluating their investment management as many funds are moving out of equities.

The asset manager found during its Global Quick Poll of 157 pension executives that in the wake of poor performance and increased funding gaps, 64% of respondents made asset allocation policy changes in the past year, while almost half are moving assets out of equities.

At least 33% of fund managers still view global equities as the better investment choice in 2009 - about half the number that felt global equities would be the place to be in 2008 - according to Hewitt's poll. Almost 38% opted for corporate bonds, while 5% said they preferred cash.

John Belgrove, principal consultant at Hewitt, said despite doubts being flagged, portfolio diversification is "a proven mainstay".

"Once again, timing and clear market views are critical to these decisions even for medium- and long-term success," he concluded.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on + 44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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