UK – UK pension funds are turning evermore frequently to speciality managers, according to a study by Greenwich Associates. Over the past five years, use of specialist managers has more than doubled, from 41% in 1998 to 89% in 2002. The share of total assets managed by specialist managers has grown to 74%, from 27% just three years ago.
As a result, the average number of managers employed by a fund has grown from two or three just five years ago to 4.2 now. This number Greenwich expects to climb further.
The market study also revealed that British pension funds are investing less in domestic equity. The percentage of total fund assets invested in domestic equity dropped to 43% in 2002 from 47% in 2001, and 49% in 2000.
Lower equity prices and recommendations put forward by the Myners Review are said to be behind the decline. Domestic equity investment, however, remains higher in the UK than in most of the world’s other major markets.
According to Greenwich, funds are moving assets more into fixed interest. 23% of total assets are invested in the class, up from 21% in 2001 and 19% in 2000 – a trend which Greenwich believes will continue.
In terms of scheme type, defined contribution (DC) plans in the UK are believed to be increasing. Nearly half of all UK corporations now offer DC plans, says Greenwich, - up from one-third two years ago.
The study was conducted in April and May of this year with professionals at the largest tax-exempt funds in the UK.