WEST PALM BEACH, FL (HEDGECO.NET) – As the appeal of hedge funds to pension schemes continues to rise in the United Kingdom, some of the UK’s biggest corporate pension funds may likely reduce theirholdings in the domestic equity markets during the next 10 years. Roger Urwin, global head of investment consulting at Watson Wyatt, a UK based investment-consulting firm, made this prediction
According to Urwin, UK�s big pension funds may downsize their domestic equity holdings to about 20%. Currently the percentage of such investments by UK pension funds is about 60%. This shift may be related to the pension crisis according to published reports. Some UK companies have decided to �close their final salary retirement schemes to new entrants�.
This sale would be significant, amounting to over US$200 billion. These funds are expected to be finding homes in other asset classes. Hedge funds stand to gain from such changes. Currently an increasing number of UK�s pension funds are increasing their hedge fund portfolios.
Recently the pension administrators of Rail Pension Scheme, decided to invest about US$1billion of its retirement nest eggs into alternative investment strategies. This amount representing about 5% of the total pension schemes� assets is the largest investment of any British pension scheme into hedge fund investment strategies to date, according to published reports.
Pension funds in UK have not been active with hedge fund investments historically; however we are beginning to see the emergence of new trend, as many more of such groups have increasingly embraced hedge fund investment strategies. There is little doubt that such trends would have a continuing significance for the near future. .
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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