Pension portfolio values hit
Almost 50% of European pension funds say they have experienced a notable impact on their fund assets in the light of the terrorist attacks in the US last week and the subsequent fallout of global markets, according to an IPE survey (see page 80).
However, the survey reveals that the impact of the US tragedy is by no means uniform amongst schemes.
One manager confesses that the fund has lost a “tremendous amount of money” following the September 11 disasters.
On the whole, though, damage to portfolios appears to have been relatively slight, with a number of pension funds noting that their NAVs mirrored losses on the markets.
A scheme manager comments: “The value of the portfolios is down in line with the falls in the main markets, except for local property.”
In terms of subsequent action, however, the survey records that managers believe it is too early to say how pension funds will react over time.
Only 18% of schemes say they have already made portfolio changes, with a number of those noting that they have overweighted Europe against the US or sought to reduce the level of risk in their equity exposure.
The majority of pension funds concede that they are waiting for the reaction of the US to the attacks before taking any action.
A similar contingency strategy is given regarding strategic reviews.
Less than a third of funds say they have reviewed their strategies thus far, although one says they carried out a review just days after the attacks on the US and were re-examining this on a ‘rolling basis’.
The vast majority predict such reviews may not be far off – mostly within a matter of weeks, albeit dependent on possible US retaliation.
“This will be considered as events unfold, such as US military action,” comments one fund. Another scheme manager is more circumspect: “We will only take a strategic review if there are significant impacts on the world’s financial markets.”
Nonetheless, two thirds of managers believe that the events will warrant a change in asset allocation at some point. “Asset allocation will change, but it is too early now,” says one scheme head, adding: “The portfolio could become more defensive.”

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