UK – The National Employment Savings Trust (NEST) has lowered its exposure to UK investments markedly in the last year, with domestic holdings now only accounting for 30% of assets, down from nearly 50% last March.
Publishing its annual report for the financial year 2012-13, the defined contribution scheme said its retirement date funds – or default options – performed as expected.
“They have delivered above-inflation returns within our given risk budgets while protecting members from excessive volatility in uncertain conditions,” the report notes.
Offering up a sample of returns from some of the more than 50 options, NEST said the retirement date funds for members reaching pensionable age in 2021, 2040 and 2055 all saw double-digit returns.
A member retiring in eight years saw investments grow by 12.2% over the year and by 10% since the fund was launched in August 2010, while a member retiring in 27 years – therefore in the middle of the growth phase – saw returns of 13.6% over the year.
Members with a greater risk appetite invested in the NEST Higher Risk Fund saw returns of 15.6%, only 1.1 percentage points above the Sharia-compliant fund.
Those who opted for the lower-growth fund only saw returns of 0.4%, in line with the option’s benchmark return both last year and since the fund’s inception.
The scheme has also significantly rebalanced its asset allocation away from the UK, as domestic exposure was down by 20 percentage points year on year to just 29.9% of all assets.
Instead, NEST increased investment to North America – at 35.9%, the scheme’s single largest regional exposure.
A greater emphasis was also placed on Continental Europe, up nearly 3 percentage points to account for 18.4% of investments.
Latin and South America remained the smallest identified region, with investments in the area nonetheless rising over the 12 months from 0.4% to 1.9% of total assets.
The fund also said NEST Corporation, the entity responsible for the day-to-day running of the fund, had been the victim of fraud.
Chairman Lawrence Churchill said the schemes defences had been “strengthened” since the £1.4m (€1.6m) payment had been uncovered.
He added that, despite the money not coming straight from members’ pots, if the scheme were unable to recover the money, it might increase running costs.