Market changed public pensions' strategies - Fidelity

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UK- Recent stock market turbulence may have persuaded local authority pension funds to shift more asset allocation into alternatives, suggests a survey by Fidelity International.

Findings of Fidelity's fourth annual survey of local authority finance heads indicate 24% of respondents - almost one in four - "has been influenced into making asset allocation changes by recent equity market movement" and two-thirds will decrease their exposure to equities over the next 12 months.

More specifically, of the 62 local authority schemes involved in the study, over half (57%) said they will allocate to property for diversification purposes and one in two will choose private equity while 63.6% said they will allocate to alternatives such as currency, infrastructure, commodities, and hedge funds.

At the same time, Fidelity has found a "handful" of schemes who allocated over 40% of their assets to fixed income over the last four years now hold no bond assets, while 75% of schemes have less than 20% exposure to fixed income compared with 53% in 2004.

One in five schemes involved in the study are also reported to hold 20-30% of their assets in fixed income and only 4% expect to increase their bond holdings, while 50% will in future allocate to global equities.

The University of Plymouth and Crispin Derby Ltd conducted a postal questionnaire survey with 103 local authority finance directors - which drew a 51% response - and interviews with 10, in January and February, for the Fidelity International study.

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