Alternative investments are gaining popularity across Europe, according to a pension fund asset allocation survey by Mercer Investment Consulting. Spanish funds have the largest average alternatives allocation, at 22%, and U.K. funds have the smallest, at 3%. Also, more continental European pension funds — an average 13% — now invest in hedge funds, compared with 7% in the U.K., the study noted.
The survey also found that U.K. and Irish pension funds have the highest average exposure to equities, at 62% and 60%, respectively, while other European pension funds average 33% and invest more heavily in bonds. Equity investment in Europe is split about equally between domestic and international markets.
This is the first year Mercer has extended its survey beyond the U.K. to include all of Europe, spokeswoman Jackie Barber said.
The survey covers 574 European pension funds, with assets totaling €364 billion ($465 billion). That comprises 426 U.K. pension funds with combined assets of €258 billion and 148 funds from continental Europe and Ireland with combined assets of €106 billion.