Bonds are beginning to replace equities in pension funds in the United Kingdom, according to The Financial Times.
Investments in equities have dropped from 60% of investments in defined benefit plans in 2006 to 55% in 2007. Bonds and alternatives have taken their place, with fixed interest assets rising 3% to 29% and alternatives and cash rising 3% to 16%.
This is the shape of things to come, said Ian McKinley at
Paul Black, head of investment consulting at
Schemes are starting to mature; more are closing to new members and some to future accrual. This is pushing them to higher allocations to bonds, he said. Also, there is a growing realization from trustees and corporate sponsors of the risk that high equity weightings bring to schemes.