UK - Alternative investments will become increasingly important to local authority pension schemes, delegates heard at the Local Authority Pension Fund Alternative Investment Conference in London.
Bacon & Woodrow partner Kerrin Rosenberg said there was a case for private equity for pension fund portfolios as they were now producing higher than average returns.
But he added: “The importance still remains in identifying the right fund manager as private equities cover an enormous range of funds.
“In the past most pension funds have not thought about it – but it is only accurate to say that some pension funds are looking at this as a serious option.”
Delegates – including representatives from Nottinghamshire County Council Pension Fund, South Yorkshire Pensions Authority, Staffordshire County Council Pension Fund, Warwickshire County Council superannuation Fund, West Yorkshire Pension Fund and Greater Manchester Pension Fund – heard that the use of private equity investment in the US had risen to $443bn in 1999.
Rosenberg said: “In the UK there is a moderate increase in exposure – although this is slightly backwards-looking compared to the US.”
The conference highlighted that equity markets have been on a continual roll since the 80s and one of the key concerns regarding private equity was the large spread of returns from investment.
Staffordshire County Council group accountant Reg Smith said: “Our pension fund allocated part of our pensions portfolio to private equity 18 months ago in the sum of £40m out of total assets of £1.5bn. So in a sense we pre-empted the Myners review.”
He added: “In the 1980s there was a reluctance to go into private equity. However, since then there has been a resurgence in private equity and is used as an enhancement to traditional investment areas.”
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