EUROPE - European investors embraced passive management and de-risking strategies in 2008 following stock market downturn and a lack of faith in alternative asset classes.
The Swedish state pension fund AP4, which appointed Global Investors, State Street Global Advisors and BlackRock to handle passive global equities mandates worth a combined €3bn in September, said it was planning to spread its passive investment strategy across different regions.
AP4's head of external managers Tobias Fransson, said: "What we are doing is to have passive alternative in all regions and then part of the funding will come from internally managed passive portfolios initially.
"If we feel that we should have more or less active money in Japan we will use the passive mandates we have decided on now to fund it. So over time I think the level of passively managed assets will vary in different regions."
While passive strategies gained popularity, hedge funds and currency management, tarnished by scandals and poor returns, were hit badly as investor scepticism increased at the end of the year.
MandateWire said it had witnessed hedge fund asset inflows falling from a first quarter 2008 high of over £1.1bn to only £227m by the fourth quarter, while currency inflows dropped to a negative $23m in the third quarter of the year.
The global credit crisis also pushed equities on a further downward spiral with MandateWire logging net outflows of £4.6bn in 2008. An already bad year was sealed in the fourth quarter, with net outflows reaching £8bn as investors fled the asset class.
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