Pensions - Articles - Schroders FTSE DC report shows trend in diversification

 The research shows that allocation to alternative assets, including real estate and commodities has increased. FTSE 100 companies surveyed have continued to increase their asset allocation from 8% in March 2013 to 12% in March 2015. FTSE 250 companies surveyed have also made increases from 5% in March 2013 to 9% in March 2015.

 Another notable trend has been the reduction of exposure to developed equities. This has decreased by 10% over the past 24 months. FTSE 350 pension scheme’s allocation to developed assets has fallen from 79% to 71% since our inaugural analysis in March 2013. This 71% can be broken down into 29% in UK Equities and 42% in Global Equities.

 Looking at the FTSE 100 specifically, pension schemes have reduced their allocation to UK equities over the last six months, taking the total from 29% to 25% and the total developed equity allocation down from 72% to 69%.

 A growing trend over the past 12 months has been the shift in fixed income asset allocation within FTSE 350 schemes, increasing from 7% to 14% and in the past six months from 9% to 14%. Nearly a third (29%) of the schemes analysed have an allocation of at least 20% to fixed income assets, a year ago this weighting only applied to 3% of schemes.

 Stephen Bowles, Head of UK Institutional Defined Contribution, Schroders comments:
 “We welcome the growing trend of diversification which we have observed in this and our report in October last year. Auto-enrolment has boosted pension scheme membership and over 5.2 million employees now have access to a company pension. This means an appropriate truly diversified defined contribution default strategy is more critical than ever before.”