Over three-quarters of defined contribution pension funds expect their appetite for investment risk to grow during the next three years to meet their long-term liabilities, a poll has found.
Financial services firm State Street surveyed 134 pension funds across Asia Pacific (APAC), Europe, Middle East & Africa (EMEA), and the Americas. It said that the shift meant there would be an increase in exposure to alternative investment risks.
The poll found that some 60% intended to increase their exposure to private equity, while others would invest in real estate and infrastructure at 45% and 39% respectively.
Oliver Berger, senior vice president for State Street EMEA, said: 'Pension funds are under huge pressure at the moment. With increased market volatility, they are faced with challenging and complex liabilities.
'To achieve the returns they need, they have to take on more risk. However, they are better equipped than ever before to do this. With improvements in data mining and management and reporting, fund managers and asset owners have a better understanding of the risk reward profile of investments.'
Regionally, respondents in the Americas showed high levels of interest in expanding their investment in to private equity, with 68% planning to increase their allocation, compared to 60% in EMEA and only 45% in APAC.
The poll also found that APAC is ready to grow in real estate allocations, with 57% of respondents in the region planning to increase their investment in this area, compared to 45% in the Americas and 40% in EMEA.