UK - Scheme investments must be diversified, flexible and avoid a short-termist approach, delegates at Mercer's Global Investment Forum heard.
Head of UK investment consulting Andrew Kirton – speaking at the conference which is for clients and managers only – said more than three-quarters of UK pension funds invest in domestic equities compared with under a quarter in French schemes and 19% in Germany.
He said this lack of diversity was holding returns back and the short-term pressure on fund managers to perform was a hindrance to schemes while consistent performance for alpha funds was elusive.
Kirton said: “Institutional investors expect too much of their investment managers. They monitor them over too short a period, judge them too quickly, fire them too easily and are too performance driven – and if that sounds like I’m laying it on thick, just re-read the Myners Report.”
Kirton added: “There is a middle ground between strategic asset allocation and very short-term tactical asset allocation where a more dynamic approach to asset management, particularly asset allocation could yield value.
“The question is who should operate and provide direction in this gap? This is an area where continued neglect could prove costly.”
A handful of industry heavyweights have begun trialling a so-called 'mid-life MOT', with positive initial results reported by all those involved.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.