IRELAND - Pension funds have been actively reducing their risk exposure after seeing a drop of 1.3% in asset value over 2007, according to the Irish Association of Pension Funds (IAPF).
Patrick Burke, chairman, IAPF, said trustees altering bond maturities to match liabilities was of equal significance: "Of the overall fixed interest holding, 42.1% were held in medium and long dated bonds, which more closely match pension scheme liabilities, compared with just 27.3% at the end of 2006.
"Given the long term nature of pension scheme liabilities, this increase shows positive action on the part of pension scheme trustees to reduce volatility and to assume the challenges of liability driven investing (LDI) in a straightforward fashion."
Irish pension funds reduced their exposure to domestic equities after a poor year, but increased their allocation to other Eurozone and UK stock markets, the IAPF's figures showed.
On average, pension funds had reduced domestic holdings by 40% from the end of 2006 to 8% at the end of the following year.
The chairman also predicted an increase in the number of trustees moving to alternative asset classes to assist risk management of portfolios, despite a relatively small average allocation to this area in 2007.
However the survey highlighted that overall, the country's pension industry had almost doubled in value in five years to €86.6bn (US$136.1bn).
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