UK - Scottish Life's £1.8bn Balanced Managed Pension Fund has increased its property weighting from 1% to almost 15% following a 12-month review.
The new 14.5% property weighting, which Scottish Life claimed is more than 12 times the sector average of 1.2%, was the result of a decision to, “move away from the herding mentality prevalent in the managed funds sector,” and to introduce greater diversification into the fund.
A Scottish Life spokesman said: “In round terms it has gone from 1% to 15%.
“We stood back and asked, ‘what’s a balanced managed fund trying to do?’ The answer is it’s trying to provide balanced performance with a moderate degree of risk.
“As an industry we were chasing each others performance and had become anything but balanced. Our model is not the only answer but it is certainly a sensible answer, unlike the vast majority of other funds.
“We at least recognised the stupidity of the situation we had got ourselves into as an industry and we have done something about it.”
The increased property weighting is made up entirely of UK commercial property, and managed by Royal London Asset Management (RLAM), which manages property assets in excess of £2.7bn.
Graham Dow (pictured), head of investment marketing at Scottish Life, said: “The average equity exposure in the ABI Balanced Managed fund sector is 80% with very little exposure to property, which we see as an important asset class for many savers.”
Julia Martin from RLAM said property was an “excellent diversifying asset class” within a pension portfolio, and that it offered an attractive yield.
“Property encompasses a number of differing sectors and at present the outlook for the commercial property sector is particularly upbeat,” she said.
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