U.K. pension funds significantly reined in real estate investments in 2008 but continued to diversify into other alternatives, according to Watson Wyatt Worldwide. That conclusion is based on searches and hires performed in 2008 by the consulting firms 100 clients.
Last year, the number of U.K. real estate mandates from pension funds fell about 75% from 2007, returning to a level last seen in 2003, said Paul Deane-Williams, Watson Wyatt spokesman; he could not provide data on the number of searches by press time.
Meanwhile, searches for direct hedge funds rose 29% in 2008 to 45, while hedge fund-of-fund searches fell 11% to 24; fund-of-fund searches fell as a proportion of hedge fund searches to 35% from 44% in 2007.
The number of private equity searches rose 43% to 30, in part because of larger pension funds making more direct investments, Mr. Deane-Williams said. The firm helped fill 10 infrastructure mandates, compared to none in 2007.
Among traditional investments, bond mandates awarded rose 26% to 58, while equity mandates fell 8% to 76.
Total U.K. manager selections rose 8% to about 280.
Globally, manager selections increased about 15% in 2008 to more than 700, representing $65 billion of assets moved by Watson Wyatts 268 clients.