Companies in the U.K.’s FTSE 100 index appear to have stopped slashing their allocations to equity markets, at least temporarily, according to actuaries Lane Clark and Peacock.
LCP, which tracks the finances of the FTSE 100’s pension schemes — some of the biggest in the UK — in its annual report, said today that the schemes held 36.5% of their GBP447 billion of assets in equity investments at the end of last year. That compares with 34.8% at the end of 2011.
Bob Scott, a partner at LCP and lead author of the report, told Financial News: "It’s a combination of a few things. Firstly, over the past year or so equity returns have been quite strong and so the proportion would have drifted up anyway due to market movements.
"But there is also a feeling amongst pension trustees and sponsors [companies] that bonds have got pretty expensive. I sense that schemes are not simply going to buy bonds at any price. And there have been examples of pension schemes that have actually tactically gone out and increased their equity weighting, because they think that’s the best place for the money."
During 2012, LCP said, support services and outsourcing group Bunzl, and specialist engineering group Meggitt, were among the largest movers out of equities. Conversely, speciality chemicals group Croda reported a nine percentage point increase in the stock market allocation for its GBP700 million pension fund.
