U.K. pension plans almost doubled their use of specialty money managers over the past three years, with 75% of U.K. funds using specialty mandates as of June, compared with 40% of U.K. funds in June 1998, according to new research published today by Greenwich Associates. Smaller pension plans and local authority plans, as well as large corporate plans, have been shifting to specialty managers, said John Webster, Greenwich consultant.
U.K. pension plans also are increasing their allocations to international equities and bonds. Average active investment in domestic equity has fallen to 33% of total assets as of June, compared with 40% in 1998. Investment in fixed income increased over the same period to 21% of total assets, from 14%.
Just over a third of the market now uses customized benchmarks, but the report said that number is likely to increase following the shift to specialty managers and the introduction of the Myners Review recommendations that require U.K. pension plans to use customized benchmarks.