UK- Holdings in domestic equities by UK pension funds has fallen below 50% for the first time since 1983 according to the 2001 Russell/Mellon CAPS pension fund survey. The 1651 UK funds surveyed by Russell/Mellon held an average of 47.4% of their assets in UK equities, down from 51%at the end of 2000.
Much of this withdrawn money has been invested in overseas equities which the survey says have risen two and a half points in 2001 to 25%, the highest level since 1989.
Weightings in US equities rose dramatically during the year, from 4.7% to 7.2%, the highest level for ten years but below the corresponding figure of 9.9% for European equities.
Overall, UK pension scheme holdings in equities fell around one point to 72.4% in 2001 while investment in fixed income products rose two percentage points to 23.4%. Ten years ago an average UK fund held more than 81% in equities.
Alan Wilcock, head of research and development at Russell/Mellon, says that the move by UK schemes to fund specific benchmarks has fuelled the switch.
Although property was the best performing asset class in 2001, pension fund investment in it remains relatively stagnant at 1.8%.
Wilcock also says that, despite plenty of talk and media coverage of hedge fund and private equity investment, in reality there is little evidence from the survey to suggest much money is actually being invested in the categories.