UK - Long-term balanced mandates have come under fire by a leading fund manager for their "inability to make strong and dynamic asset allocation" and their high-risk exposure.
Baring Asset Management claims that, compared to targeted return strategies, many traditional long-term balanced pooled funds offer similar projected returns but with double the risk.
It said that target return asset allocation strategies could give pension funds more asset diversification, similar returns and up to half the risk, compared to index or peer group methods.
Head of strategic policy group Percival Stanion said: “With asset allocation an important part of portfolio performance, the effects of globalisation and current monetary policies mean that investors need more diversification between assets than 10 years ago.
“Portfolios need more exposure to alternative investments, including property and the less correlated equity markets of Asia. Active fund managers should now be making more dynamic asset allocation decisions for long-term balanced mandates,“ he said.
The fund manager also warned of a “summer shower” and said that it had moved institutional portfolios to an underweight position in equities, adding to cash instead.
Stanion said that the combination of rising GDP growth in the US and likely rise in US interest rate might cause problems this summer for many equity markets.
MPs failed to place legislation into the Financial Guidance and Claims bill that would have made pension guidance default, which Just Group director Stephen Lowe said left a "bitter taste".
Aegon has called for the government to double the tax exemption on employer-arranged pension advice, up from £500 to £1,000.
Institutional investor confidence in Europe rose by 8.9 points in April with each region showing growing appetite for risk, according to State Street Global Exchange.
It has again been suggested self-employed workers could enjoy pension provision through the tax return process. James Phillips explores the latest proposals.