National Employment Savings Trust, London, boosted its assets 20.6% in three months to £4.1 billion ($5.3 billion) as of Sept. 30.
In the 12 months ended Sept. 30, assets grew 95% from £2.1 billion as of Sept. 30, 2017.
The net return for the year ended Sept. 30 was 10.1%, compared to 8.7% for the previous year ended Sept. 30, 2017.
NEST delivered an average annualized net return of 10.5% for the five years ended Sept. 30 for funds in the growth phase of the default strategy, up from 10.2% annualized net return for the five years ended June 30.
The U.K. government-backed multiemployer defined contribution plan, known as a master trust, is now managing assets on behalf of 7 million participants and 680,000 employers, up from 6.9 million participants and 658,000 employers in the previous quarter.
As of Sept. 30, global developed market equities made up 34% of the allocation in growth phase of the default strategy, down from 40.3% a year earlier.
NEST increased its climate-aware global developed market equities allocation to 14.6%, up from 9.8% a year earlier. The sterling corporate bonds allocation increased to 13.2%, from 13.1%. The plan's real estate allocation decreased to 7.8%, from 12.6%. Global emerging market equity was 7.2%, up from 5.6% a year earlier. Commodities constituted 6.4% of the allocation, after being introduced in July this year as an inflation hedge.
Global high-yield bonds and emerging market debt were 4.2% each, up from 2.2% and down from 4.6%, respectively. Short-duration investment-grade bonds decreased to 3.6%, from 4%.
Global listed real estate was 3.1%, down from 4.2% a year earlier, with the rest in dynamic risk management, also a new allocation.
Allocations from last year that have been dropped are 3.2% equity risk hedging and 0.4% low-risk sterling liquidity.
"U.S. equity markets performed well this quarter due to strong fundamentals, record low unemployment and fiscal stimulus," said Mark Fawcett, chief investment officer, in a quarterly update. "This, alongside the U.S. Federal Reserve raising interest rates, had a positive effect on the U.S. dollar, which has continued to strengthen. Strong U.S. performance boosted our portfolio. However, the U.S. is in a monetary policy tightening cycle and equity prices are likely to be sensitive to changing expectations about how quickly the Fed will normalize interest rates. Emerging markets also suffered due to the dollar appreciating, trade wars, and financial turmoil in Turkey and Argentina. We have very little exposure to these regions, shielding members from most of the turmoil."
Mr. Fawcett added: "In the U.K., the Bank of England increased rates at the beginning of August, but despite this, the currency weakened due to uncertainty around Brexit. The monetary policy committee is not expected to raise rates again until a transition agreement is in place, but sterling may continue to fluctuate. We've prepared for this by introducing a currency hedge against half our developed market equity exposure."
