Slight drop in equity share
The exposure to equity investments of UK pension funds remains among the highest in Europe, despite market underperformance. According to data from the WM Company around 68% of pension fund assets were invested in equities at the end of 2001, only three points down the 71% registered at the end of 2000.
The exposure to UK equities, around 45% of total assets, still doubles the proportion invested in foreign stocks that attracted 22.6% of pension fund money at the end of last year. In this category, Europe ex-UK was the most attractive zone for UK investors, which invested 8.2% of their portfolios in this region, followed by North America with 6.4%, and Japan with almost 3% of total assets.
UK bonds account for 11% of pension fund portfolios, whereas other asset classes such as UK index-linked products and real estate investments represent around 7% and 6% of the total portfolio.
The best investment results during 2001 came from property investments, which returned 6.2%, followed by UK bonds with 3.2% and overseas bonds with returns of 2.4%.