UK - Overall pension fund equity weightings fell by 2% in 2005 because of continued reductions in exposure to UK equities, a survey has found.
In its survey on the performance of 570 UK pension funds at the end of 2005, Mellon Analytical Solutions found overall weightings had fallen from 66.5% to 64.5%, a drop which it said marked six consecutive years of decreases in equity weightings.
Over the year, average UK equity weightings were found to have fallen from 39% to 35.7%, which Mellon said was the lowest level since their records began in the mid 1970s.
Conversely, Mellon found that in 2005, pension funds increased their overseas equity weightings from 27.5% to an “all time high” of 28.8%.
US and Japanese equities were said to be the main beneficiaries; US weightings rose by 1.2%, from 8.5% to 9.7%, while Japanese equities rose by 0.5%, from 4.6% to 5.1%.
European equity weightings fell from 9.7% to 9.2% over the year, which according to MAS, meant US equity weightings exceeded European weightings for the first time since the end of 1988.
Exposure to bonds, index-linked gilts and property was found to have risen correspondingly. Mellon said overall fixed interest weightings increased by 1.5% in 2005 to reach their highest recorded level of 23.4%.
Of this increase, government gilts rose by 0.8%, from 10.4% to 11.2%, while weightings in UK corporate bonds rose from 10.8% to 11.2%. Index-linked gilt weightings rose by 0.2% to 7.7% in 2005, while property rose by 0.3% to 2.3%.
By Lisa Haines
This week's edition of Professional Pensions is out now.
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