London
22 March 2017
Reporter: Drew Nicol

UK pension funds embrace alternatives


UK public sector pension funds are jostling to expand their alternatives exposure as a way to diversify their portfolios ahead of the launch of the Local Government Pension Scheme (LGPS) pooling project in April 2018.

A State Street-sponsored report into pension scheme asset allocation revealed a 61 percent spike in alternatives exposure by the 89 public funds participating in the LGPS, representing £16.6 billion in assets.

A further £34.7 billion in assets were given over to fixed income, leading to a 31 percent increase in those business lines.

The report explained that “traditional assets classes such as equities and fixed income remain core holdings for these funds with equities accounting for 48 percent, and fixed income accounting for 14 percent of their overall allocation”.

State Street’s data also highlighted a 13 percent increase in overall scheme assets, bringing the total to £251.8 billion.

Overall exposure to equities went up by 9 percent to £251.8 billion.

Andy Todd, head of UK pensions and banks, asset owner solutions for State Street, said: “Mounting costs and pressures lower-for-longer yields have led pension fund investment committees to seek ‘higher yielding’ assets to assist them in meeting their strategies investment targets.”

JR Lowry, head of State Street Global Exchange EMEA, added: “LGPSs are in a period of extreme change and technology will be the next stage of their evolution.”

More Industry news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Clearstream promises post-Brexit services continuity
20 October 2017 | London | Reporter: Jenna Lomax
Despite the uncertainty that came after the referendum results last year, Clearstream said its main objective through Brexit was to minimise risk of cross-border settlement
SIX successful in migrating clearing payments under ISO 20022
19th October 2017 | Zurich | Reporter: Jenna Lomax
The new Swiss Interbank Clearing (SIC) payment system facilitates the cash-side settlement of securities transactions in real-time
Peel Hunt expands Torstone’s Inferno into US business
13 October 2017 | London | Reporter: Theo Andrew
According to Peel Hunt, the agreement with Torstone will give the firm more flexibility to develop its US business
Orange and BASF select BNY Mellon as depositary bank
12 October 2017 | New York | Reporter: Becky Butcher
BNY Mellon has been appointed as successor depositary bank by both BASF, a German-based chemical company and Orange, the telecommunications company, for their American depositary receipt programmes
BNP Paribas wades into collateral pools with triparty service
05 October 2017 | London | Reporter: Drew Nicol
As a triparty collateral agent, BNP Paribas Securities Services handles its clients’ collateral needs, from net exposure calculation, automatic collateral allocation and substitution, to physical settlement and custody
Smartkarma opens European hub in London
25 September | London | Reporter: Theo Andrew
According to Smartkarma, the move means European analysts can now register with the platform to join the data platform, offering a network approach to insights and publishing tools
First RFQ inflation swap transactions executed on Tradeweb platform
25 September 2017 | London | Reporter: Stephanie Palmer
Tradeweb has completed the first cleared inflation swap transactions using request-for-quote protocol, on its European Interest Rate Swap platform
More Industry news