UK Pension Funds Up Equity Bets

April 16, 2002 ( - As a global economic recovery showed further signs of taking hold in March, UK pension and life insurance investors increased their equity weightings at the expense of their cash and bond allocations, fund tracking firm Lipper Inc found.

As in the past, UK equities accounted for the lion’s share of these institutional portfolios. Lipper reports that over the month:

  • pension funds allocated some 55.9% of assets to the UK stock market, from a previous 55.6%
  • life funds assigned a 57.8% weighting to UK equities, from a previous 57.8% allocation.

Pension funds also increased their positions in the Japanese, European and Pacific ex-Japan stocks markets, but along with life funds left their US positions constant at 7.3% and 7.4% of portfolios respectively, Lipper data show.

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To increase these investments, pension funds cut back on property, UK fixed interest, foreign bonds and cash, while life funds trimmed their foreign bonds and cash positions.

Mutual Funds

However, mutual fund managers, partly influenced by the inflationary concerns spurred by oil price hikes, and troubled by the plethora of accounting scandals filtering through the market, increased their cash positions by selling off equities.

Over the month, cash holdings in mutual funds were up by 2.2%, while funds sliced their UK stock exposure by 1.1% and their US exposure by 0.8%.

Lipper tracked 144 life funds, which invest assets in life assurance policies with assets of £37.4 billion and 163 pension funds with £80 billion in total assets. The survey covered 122 unit trusts with combined assets of £17.3 billion.