Two thirds (66%) of pension fund managers are concerned about current levels of market volatility. While more than a fifth (22%) claim that an increase in volatility becomes more of a concern than an opportunity, according to the latest poll by Baring Asset Management.
Nearly two in five (38%) pension fund managers are mitigating market volatility by shifting their funds to multi asset products. According to the research, around 19% of any single pension fund is currently invested in multi asset products.
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Over two-thirds (70%) of pension funds use multi asset strategies which include targeted return, diversified growth and dynamic asset allocation – an increase of five percent from the last poll in November 2012. Nearly half of pension fund managers have increased their exposure to diversified growth funds (up by 3% to 46%).
Andrew Benton, head of UK and international institutional sales at Barings, commented, "These results show that in the current market environment, volatility is an increasing concern for pension funds. They have to be ever more active in identifying ways to minimise volatility whilst capturing growth.
"There are many ways for pension funds to incorporate diversification into their allocations. Our Dynamic Asset Allocation Fund seeks to produce equity-like returns with less than equity risk by using a flexible and dynamic approach to multi asset investing. We aim to capture returns when available whilst protecting capital during falling markets."
The survey also indicated a greater interest in accessing emerging markets opportunities via a multiasset approach. When the pension fund managers were asked how their fund gains exposure to emerging market equities, 14% said they use multi asset funds against just 11% who cited this in the last poll.
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