EUROPE - Schemes still favour equities despite market volatility, a J.P. Morgan Asset Management survey revealed.
The poll - which analysed the views of over 194 European pension schemes and other institutional clients as to their market and asset allocation views - showed, on average, institutional investors had not dramatically altered their allocation to equities.
It found 61% of institutions had not changed their target equity allocation recently despite adverse equity market conditions - even though they still cite market volatility as a main concern over the next 12 months.
The survey also found that, in the UK, institutions on average allocated 56% to equities, 31% to fixed income and cash and 14% to alternatives - demonstrating a higher level of risk than their European counterparts.
However, although it said portfolio allocations remain largely unchanged, the survey found the process by which institutions are looking to achieve exposure and generate performance could be shifting.
It found there had been a significant shift away from quantitative approaches in favour of a fundamental approach - particularly amongst larger institutions, where 80% of institutions with over €20bn (US$30bn) under management said they now prefer an approach which appraises attributes such as quality of earnings, products and management.
J.P. Morgan Asset Management head of UK institutional business Peter Ball said it was clear the volatility in equity markets over the last two years had not deterred UK institutional investors.
Despite this, he said UK institutions had, on average, a much larger allocation towards equities than other European countries and were experiencing a shift of institutions increasing allocations to fixed income and alternatives.
He said: "I expect UK institutions will become more in line with the rest of Europe from an asset allocation perspective in the medium to long term."
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