UK - The £10.6bn (US$16.8bn) Shell Contributory Pension Fund is set to invest 5% of its portfolio in hedge funds and other alternatives for the first time, a trustee newsletter revealed.
The trustee of the oil company's UK scheme said following the 2009 investment strategy review it was considering an allocation to "for example, well-chosen hedge funds" which could can provide "diversification benefits in volatile markets".
It also said it had agreed to invest a larger proportion of its fixed income allocation in assets which would give some protection from the effects of inflation.
The letter added: "Moving to the new strategic asset allocation will require a significant amount of sales and purchases of investments.
"Implementation has already started but is likely to take several months in the current financial climate, in order to minimise transaction costs and to avoid the loss of value in the current portfolios."
According to the new strategic asset allocation, 40% will be allocated to fixed income, 40% to equities, 5% to private equity, 10% to property and 5% to alternatives.
In contrast, at the end of 2008, the fund had 56% invested in fixed income, 32% in equities, 7% in private equity and 5% in property.
SCPF trustee chairman Clive Mather said: "Economic conditions have been very difficult. Our change in investment strategy in 2007, where we moved a quarter of the fund out of equities into bonds, has helped to avoid the worst of the fall in financial markets, but the fund has not been immune to the effects of the credit crunch."
The fund had a surplus of £182m at the end of December 2008, which represented a funding level of 102%, according to the latest actuarial valuation.
Shell did not immediately return phone calls seeking further comment.
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