UK - Trustees must adopt a more active investment strategy to counter falling equity returns, Schroder Investment Management says.
The firm believes schemes should look to diversify their fixed income holdings and invest in small cap stocks.
Schroders’ comments come in the wake of forecasts that equity markets will not produce anything like their historically high returns.
Schroders global head of fixed income Bob Michele said the global fixed income market provided a lucrative investment option for trustees and insisted bond allocation into UK gilts was a mistake.
“Looking on a global scale, UK gilts are only 2% of the global market and they neither give the highest yield in the sector nor do they give the best likely overall return,” he said.
“Trustees should take advantage of the growing global fixed income market, which can play a role in helping to reduce deficits through diversification within the bond market.”
Schroders head of UK equities Richard Buxton agreed that traditional methods of passive management would not produce the required returns and urged trustees to make their money and managers “work harder”.
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