UK/US - The difference in pension funds' sensitivity to equity market volatility has been highlighted by AXA Rosenberg, at its conferences for trustees and consultants in New York and London last week.
Attitudes on either side of the Atlantic were shown to be divided on issues around allocation to equities, alternatives and where they saw potential growth in the global economy.
In figures revealed exclusively to Global Pensions, almost half of UK investors said they were taking a shorter than usual view on their investments given the current climate whereas, over half of those at the US conference said their outlook had not changed.
Ian McKnight, investment consultant, Lane Clark & Peacock commented: “This is a snapshot of a time which is about to change. The US home bias which has played a big part in investment strategies is on the decline.”
Over 79% of US respondents predicted equity market volatility would be higher in 12 months’ time, but the response from the UK was undecided with no clear definite opinion.
Despite this, over 60% of US investors said they would stick at normal levels of risk in their portfolio, whilst over 40% of UK investors had dampened down their risk profiles.
McKnight added: “As US investors are more focused on their domestic market, they have perhaps not had exposure to rallies in other regions, leading them to think there is worse yet to come.”
The US investors were clear fans of their domestic equity market however, considering Asia (ex-Japan) to be the most overvalued when almost 60% of UK investors cited American markets as too expensive.
Faith in the US dollar seemed to have collapsed, over 80% of both parties considered it to be the weakest global currency over the next twelve months.
Some 25% of UK funds were shown to hold less than 25% in equities compared to 13% of their American counterparts, which would influence investment decisions.
AXA Rosenberg would be hosting further conferences in Melbourne and Toyko asking investors the same questions, and results would be released exclusively to Global Pensions.
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