UK. Pension funds shifting towards more complex investment portfolios
The majority of institutional investors like pension funds are increasing overhauling their portfolios in search of greater returns, with two-thirds having added at least one new asset class over the last three years.
That is according to a global study of investors with around £6trn in assets by consultancy firm bfinance, which finds that private debt, infrastructure and real estate are among the most popular new additions to portfolios.
Almost half of investors have increased their allocations to private markets, although a lack of attractive opportunities and delays in capital calls were cited as reasons for many still being off their long-term targets.
It was also found that, despite greater use of alternative investments, most investors have managed to reduce fees paid to external managers, with only a quarter having seen total costs increase as a percentage of assets.
Fee renegotiation, consolidating mandates with fewer managers, and conducting fee benchmarking studies using external consultants, were mentioned as the main belt-tightening tactics used by investors.
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