Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • March 2013
03

DC pension default funds 'overwhelmingly invested in equities'

Open-access content Friday 8th March 2013 — updated 8.06pm, Wednesday 6th May 2020

The vast majority of the assets in the default funds used by the UK's leading companies defined contribution pension schemes are invested in equities, according to research published by Schroders yesterday.

The asset management company's study found that 79% of the average asset allocation of the funds surveyed was in equities. Its research included the DC default funds of 16 FTSE 100 and nine FTSE 250 companies.

Almost half (46%) of this was invested in global equities - including stocks and shares on the European markets - while UK equities accounted for 33%. Just 2.9% on average was invested in emerging markets.

Stephen Bowles, head of DC at Schroders, said the research had shown that, while there was a wide divergence among default DC schemes' asset allocation, many employees of the UK's largest companies had no exposure to a wide range of alternative asset classes.

'Surprisingly the average DC default strategy of a FTSE 100 or a FTSE 250 company today appears not to have diversified away substantially from pure equity exposure,' he said. 'This indicates that trustees have hugely different opinions as to how they believe their investment strategies can best be achieved. 

'Alternatives account for just 11% of an average portfolio and therefore this does throw into doubt the widespread belief that diversification is already the "new normal" in DC.'

Among the FTSE 100 default schemes surveyed, the majority of assets were held in three key classes - global equities (47%), domestic equities (27.5%) and fixed income, such as bonds (10%). The remainder was split between cash, property, hedge funds, commodities and other classes.

FTSE 250 firms included in the research had, on average, 45% of their assets invested in global equities, with 41% invested in UK equities and 7% in fixed income. Other alternative assets accounted for just 7% of their portfolios.

This article appeared in our March 2013 issue of The Actuary.
Click here to view this issue
Filed in
03
Topics
Investment

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

New Fast-Growing Team - Actuarial Systems Development

London (Greater)
Excellent Salary Package
Reference
143762

Actuarial Pension Consultant – Scotland/Remote – Up to £90,000 plus bonus

Edinburgh / Glasgow / Remote working
Up to £90,000 + Bonus
Reference
143761

Part Qualified Pensions Actuary– Specialised Pensions Consultancy - Scotland/Remote - Up to £70,000

Edinburgh / Glasgow / Remote working
Up to £70,000 + Bonus
Reference
143760
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ