Irish schemes shun alternatives - IAPF
IRELAND - Alternative assets such as hedge funds, private equity and currency are "generally unpopular" with the trustees of defined benefit pension funds in Ireland, says the Irish Association of Pension Funds.
"A lack of understanding in investment and risk concepts may be restricting the ability of many pension schemes to manage their assets in the most appropriate manner," the IAPF said. It's released a new study - ‘Investigation of Trends in Pension Scheme Investment Report - based on a survey carried out for its Investment Committee.
"The general lack of understanding of investment issues includes some trustees of defined benefit (DB) schemes who appear reluctant to get involved with more complex, modern investment strategies, such as investing in alternative assets," said the committee's Helen Keelan.
"Such alternatives could benefit their schemes by helping to maintain overall returns of their pension fund whilst at the same time improving their level of risk diversification."
The report is the first into trends into investment practices since the IAPF's last report in 2000.
The IAPF said: "The study finds that not withstanding the reluctance of many trustees to embrace the more complex investment strategies now available to them, defined benefit schemes have made considerable progress in recent years with much greater awareness of risk and a move towards bespoke investment strategies."
"The study finds that Irish pension funds are continuing to invest in property but that there has been a noticeable shift towards investment in Europe. Other alternative assets, such as hedge funds, private equity and currency, remain generally unpopular with pension fund trustees, despite their diversification benefits."