EUROPE - European pension funds are increasingly turning to alternative investments to avoid losses on traditional equity markets, a new survey from JPMorgan Fleming Asset Management reveals.
The survey also shows that real estate continues to be the most popular asset class among investors, with a total of 70% of European institutions currently making commitments.
JPMorgan Fleming polled some 341 institutional investors across the UK and Continental Europe, including Germany, the Nordics, Netherlands, Switzerland, Italy and France. The sample represented some of the largest pension fund managers in each market with over e1trn in assets.
Peter Schwicht, head of European institutional business, JPMorgan Fleming, said: “There is a clear desire among pension funds across Europe to tap into investments which are not correlated with quoted equities – it is up to the fund management industry to provide the investment vehicles and the education required to help institutional investors manage these alternative investment classes effectively.
Schwicht said that the high incidence of real estate investment was in line with expectations: “Historically, institutions across Europe have favoured direct investment in real estate within their respective domestic markets and on the most part real estate is regarded as a ‘core asset class’ rather than ‘alternative asset class’.”
The findings also showed a growing interest among European investors in other alternatives, most notably in private equity. Around 48% of European institutions are currently investing in private equity.
Some 80% of these said they did so because of the potential for higher returns as well as the lower correlation with other asset classes (47%).
But the incidence of investment in hedge funds and currency overlay strategies was significantly lower with only 22% and 23% penetration in the European market, respectively.
The full results of the JPMorgan Fleming European Alternative Investment Strategies Survey 2003 will be published in September 2003.
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.