GLOBAL - Fund managers have hit back at claims that equity investment has "crushed" the retirement dreams of an entire generation.
A report by financial services think-tank Create and consultant KPMG claims equities are too risky for scheme investment and are an imperfect match for their liabilities.
They say this has been illustrated by the substantial losses posted since the end of the technology bubble.
Their research – covering responses of 185 investment managers in 20 countries with e19trn (£13.1trn) under management – said only 20% of firms had taken steps to shore up their business models and finances.
The report said: “For investors, the results have been catastrophic. Never have so many lost so much in so short a time.
“It was a crushing end of a dream for a generation that had been enticed to believe that stock markets had the magical power to do what governments could not: deliver decent retirement pensions.”
But the UK’s Investment Management Association chief executive Richard Saunders dismissed the attack on equities as “complete rubbish”.
He said the comments were “utter nonsense” and gave a completely misleading description of what investment is about.
He added: “It’s all very apocalyptic stuff, ‘the crushing end of a dream’ and ‘stock markets are magical’.
“Stock markets are not a zero sum game, investment is not a zero sum game. There’s a fair amount of drivel in this.”
KPMG also claimed cost-cutting and product diversification would only bring short-term gains and Create chief executive Amin Rajan said new mindsets and skills were needed.
Saunders dismissed these claims. He said market conditions had forced all firms to cut costs and review their operations.
Saunders added: “The report is a useful contribution to fund manager thinking but there’s a fair amount of rubbish in it.
“A lot is standard management consultant speak.”