UK – Legal & General reckons pension funds’ shift towards bonds and away from equities has not yet run its course.

L&G group chief executive David Prosser noted “the difficulties encountered by many pension funds following the decline in equity markets between 200 and 2003”.

“That experience, coupled with the extra reporting transparency required by a series of new accounting standards, led many trustees to rebalance the asset weightings in their portfolios away from UK equities towards bonds and a more balanced worldwide equity portfolio.

“That shift in asset weightings has not yet, we believe, fully run its course, despite the rise in equity prices in 2004.”

Writing in L&G’s annual report, Prosser said the trend towards index tracking has “further to run” in both bonds and equities. He cited its “cost and predictability advantages”.

Pooled pension fund assets at Legal & General Investment Management rose to £94bn at the end of 2004, from £73bn a year earlier.

Prosser also paid tribute to John Monckton, the fixed income portfolio manager who was murdered last year, calling him the “best of men”.

Monckton, 49, was fatally stabbed during a burglary at his home in November last year. His death was front-page news in the UK.

Prosser said: “He was the personification of gentleness and courtesy, supreme in his work with us and the best of men.” He added the team Monckton ran won no less than £4bn in mandates in the last two years.