AAA Reveals Pension Funds Favoring Alternative Investments

Boston, MA (PressExposure) July 05, 2011 -- The alternative investment advocacy and analysis group said that the latest claims from the Pension Corporation and Engaged Investor magazine about the falling popularity of equities, is a further indication of a switch towards alternatives.

The magazine carried out a study of 197 trustees of occupational pension funds and found that 77 per cent said they wanted to reduce the risk in their funds over the coming years. A total of 73 per cent said that they were planning to reduce their exposure to equities over the next three years.

Pension funds have been reducing their equity investments steadily over the past decade. In 2000, for example, 74 per cent of pension funds were allocated to equities, while this had fallen to just 55 per cent by 2010. Some 19 per cent of pension portfolios are now invested in alternatives. AAA's analysis partner, Anthony Johnson, said, "The exposure to alternatives has increased despite the pressure on fund managers to increase the performance of their portfolios to try to reduce the impact of shortfalls. This indicates that managers are increasingly considering alternatives as an equally or more lucrative option than equities."

According to the magazine's study, 47 per cent of trustees claim that tackling their deficits is the main priority. Figures from JLT Pension Capital Strategies show that by the end of May 2011, the total private sector pension deficit totaled £79 billion.

AAA claims that the emphasis on reducing risk is also vital to pension managers tackling their shortfalls. "Exposure to risky investment has resulted in billions of pounds of deficits for pension funds and many managers are now shunning traditional investments to spread risk through several different varieties of alternative investments," added Mr Johnson.

Popular alternative assets include art and antiques, real estate, managed forestry projects, impact investing and private equity. AAA encourages ethical investment and is a particular advocate of impact investing, which can bring fantastic returns for investors while helping small businesses in emerging and developing economies to flourish and build better future communities.

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Press Release Submitted On: July 05, 2011 at 4:58 am
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