Pension fund demand for multi-asset strategies rises

PensionandkeyMore than four-fifths, 83%, of UK pension schemes include multi-asset funds in their asset mix, up from 65% in the same survey conducted a year ago.

The rapid rise in popularity of these funds, which are aimed at smoothing volatility by investing in a range of asset classes, was revealed in an online poll of 64 investment managers of UK pension funds by Baring Asset Management.

“The overarching theme from this latest study is an increasing awareness of ‘volatility’, and the need to manage that, among pension funds,” says Andrew Benton, head of international sales and business development at Barings. “There are tangible rises in the use of multi-asset strategies and a continuing focus on liabilities as pension funds look to better manage risks.”

Other research suggests the popularity of multi-asset funds is not limited to the UK institutional market. A poll of intermediaries in the Middle East found that multi-asset funds were deemed the second most popular fund type in the region after equity funds.

The European retail market has also embraced multi-asset funds. The Standard Life Global Absolute Return Strategies fund, for instance, has attracted large inflows in recent years and is now worth nearly £20 billion (€24 billion).

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