A parliamentary reception hosted by the Alternative Investment Management Association (Aima) has heard how hedge funds can help pension funds close the "pensions gap".
The "pensions gap" refers to the difference between what people need for an adequate standard of living in their retirement and the pension amount they can currently expect to receive. It is considered a particularly acute problem in the UK, with roughly one in three of the UK's working population thought to be affected.
The event drew more than 30 MPs and advisers from all parties, as well as representatives of think tanks, pension funds and Aima manager members. Speakers included Labour MP Dame Anne Begg, chair of the Commons Work and Pensions Select Committee, and the Labour MP Chris Evans, parliamentary private secretary to Chris Leslie MP, who is shadow chief secretary to the Treasury.
Jack Inglis, chief executive officer of Aima, says: "We believe that hedge funds can be a vital means of reducing the pensions gap. The low interest rate environment which is likely to persist over time adds another challenge to the ability of pension funds to deliver on their basic objectives, since returns on traditional assets such as bonds are being squeezed. It is therefore not a surprise that pension fund managers are increasingly turning to investment management alternatives such as hedge funds."
He adds that the outperformance of hedge funds compared to traditional assets such as stocks and bonds over the last 20 years means they are now considered a safe and stable way to achieve returns and preserve capital.
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