UK - Property is becoming a core investment for pension funds, as a result of its low correlation to other assets and low volatility, said a survey from JPMorgan Fleming Asset Management.
Property is such a popular alternative asset class that most schemes view it as a core investment, JPMorgan Fleming claims.
A survey of 341 institutions across Europe – including 171 pension funds in the UK – found property was easily the most popular alternative asset and was held by 70% of institutional investors.
JPMorgan Fleming Asset Management head of European institutional business Peter Schwicht said: “The high incidence of investment in real estate is in line with our expectations since historically, institutions across Europe have favoured direct investment in real estate within their respective domestic markets.
“Indeed, for the most part, real estate is regarded as a core asset class rather than an alternative asset class.”
The survey also found that the main reason for investing in property was its low correlation with other asset classes, cited by 66% of investors.
Low volatility was the second most popular reason given for investing in property, cited by 51%, while 32% of investors highlighted the potential for higher returns.
F&C however take a different view to the position of property in pension fund investment, convinced of tthe argument for strong returns, but aware of it being squeezed out of the asset allocation over time.
Ian Gleeson, director of strategy and indirect funds at F&C commented that the investable universe of property is going to increase substantially.
Another development in this respect is the greater take up of European indirect funds, an investment universe valued at e80bn. In this way, smaller pension funds are entering the property market.
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point