DUBLIN - The €60m pension fund of Irish retailer Musgrave will reduce its exposure to equities in order to up its bond portfolio.

"We have implemented an LDI strategy whereby the fund now invests in longer-dated bonds that more closely match the scheme's liabilities," Kevin Cruise O'Shea, group HR manager for pension compensation and benefits at Musgrave told the IAPF annual investment conference in Dublin on Thursday.

He said that the fund will reduce its equity exposure from the current 70% to 60% by 2009 and will in turn increase its allocation to Eurozone bonds to 17.5%.

O'Shea also indicated that the scheme was moving away from active management entirely. With this step it was following a trend towards more fee-consciousness among pension funds.

In January, the Mellon CAPS pooled pension fund survey showed that net of fees active managers underperformed in bonds, property and all equity markets except emerging markets in 2006.

The question of fees also underlay the use of multi-mangers, which was another topic at the IAPF conference. Several delegates noted that multi-manager services currently were too expensive for the returns that they delivered.

Pramit Ghose head of investment strategies at Irish-based Bloxham Stockbrokers said that multi-manager performance had been "uncompelling" so far.  He added that pricing now started to look expensive and that multi-manager strategies are not worth the extra 35bp they cost?.

Although he highlighted the importance of multi-manager strategies, David Hogarty, head of consultant relationships at KBC Asset Management in Dublin, agreed that some multi-mangers are not cost effective.