European pension funds have switched from being long-term investors to risk averse, short-term players focused on fixing their deficits by the date set by their regulator. Respondents, primarily pension funds, to this year’s IPE European Institutional Asset Management survey, said the “investment horizon” was the most important factor in the management of their in-house assets. Previously this was seen as far less important than factors such as performance and risk.
The sharp readjustment coincides with a marked retrenchment into lower risk assets. Exposure to fixed income and cash has risen and is expected to rise still further while equity holdings, now just a quarter of the typical portfolio, are forecast to remain around this level.