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UK pension funds still favour equities long term

UK – The flight out of equities into bonds by the £2.3bn (€3.7bn) Boots pension fund in October has not had an influence on other UK pension funds to follow suit, says Northern Trust (NT).

Although many industry analysts wondered if the move signalled a new trend in asset allocation strategies, NT points out that it has not seen any significant changes among the pension funds in the UK for which it provides global custody, which number more than 100.

NT says that the majority of its clients now hold a variety of assets and asset classes based on prudent man principles and diversified investment strategies, though it does admit that a gradual rebalancing of portfolios in favour of fixed income wouldn’t come as a surprise.

Says Penelope Biggs, senior vice president and European head of sales and marketing: “Following the recent press coverage of the Boots case we’ve taken the time to speak with a number of our clients to gauge their opinion. Their opinion concurs with ours; which is that pension funds are long term investors and in the long run equities are still likely to perform better than bonds.”

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