Large UK pension funds are making more use of exchange traded funds as confidence in their reliability rises, according industry experts. Since the extreme volatility caused by the euro crisis, it has been common for funds to use ETFs for short periods as overlays to existing holdings in emerging markets and high yield bonds.

Paul Trickett, head of global solutions group at Goldman Sachs Asset Management, said the rise was due to the growing variety of ETFs. “The granularity you can get is great, so you can pick a particular segment of the market and underweight or overweight that sector,” said Mr Trickett.