UK - Pension funds should have a greater global outlook if they are to make the most of future returns, says new research by Dresdner RCM Global Investors.
According to the results of Dresdner’s annual survey of the UK’s top pension consultants, the latter is increasingly favouring managers with an international perspective.
The research also revealed that 70% of consultants believe that the portfolio split between UK and overseas equities should be even.
Said Mark Archer, head of institutional business development at Dresdner RCM: “With the current ratio of UK and overseas equity investment in UK pension funds standing at around 68% to 32% respectively, our research is showing a significant sea change in consultants’ opinions... .”
He added: “Over the last 30 years overseas investment has been perceived to be a risky place for pension funds, now it is viewed by consultants and, also considered by trustees, as an essential investment opportunity to provide greater returns.”
However, despite the consultants’ bullish stance - stating that trustees need to take a longer-term view of market volatility - pension funds are still cautious and remain UK equity dominated.
Other findings included:
- All ten consultants found that there was not enough choice of truly integrated global managers -50% of consultants believed there were not enough global benchmarks. But 80% think this will change following Myners.
-The best index for global mandates was considered to be the FTSE World, followed by the MSCI World, FTSE Multinationals.
-60% of respondents considered Asia-Pacific to be the best long-term growth market.
-All were unanimous that investment process was the most important factor in manager selection.
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