Pension Funds turn to multi-asset target return strategies

Baring Asset Management (Barings), the international investment management firm, has won more than £500 million in assets from UK pension funds for multi-asset targeted return portfolios so far in 2007. UK pension schemes and their consultants are increasingly recognising the benefits of multi-asset targeted return strategies seeking equity-like returns with less than equity risk.

Richard Graham, Head of UK Institutional Business at Barings explains: “We expect a very different investment environment over the next ten years where asset allocation is again the main driver of returns and portfolio diversification is key to delivering real returns and reducing risk.”

Most recently, Habitat Pension Scheme, advised by P-Solve Asset Solutions, awarded Barings £6 million, which will be invested in Barings’ Dynamic Asset Allocation Fund. The Fund, which was launched on the 17th January 2007, now has over £257 million under management (as of 30 September 2007) consisting entirely of third party UK pension scheme assets. This makes it one of the industry’s fastest growing multi-asset targeted return funds.

Barings’ Extended Risk Fund has more than £57 million in new assets so far in 2007. The Chartered Institute of Personnel and Development (CIPD) have appointed Barings to manage a £6 million mandate for its Retirement Scheme to be invested in this fund. The CIPD’s primary mission is to lead in the development and promotion of good practice in the field of the management and development of people. The CIPD was advised by AON Consulting.

Existing clients have made further inflows to Barings’ multi asset targeted return accounts worth over £15.7 million.

Graham concludes; “We have been delighted with the reaction from corporate defined benefit pension funds and their consultants to our multi-asset targeted return products, and we believe that a similar reaction from Local Authority schemes will follow. The growth of the Dynamic Asset Allocation fund in particular demonstrates the demand from UK pension schemes for an investment strategy that produces long term capital growth but within closely defined risk parameters and from a diversified portfolio of assets.”

Since the beginning of the year Barings new multi-asset targeted return clients include Doosan Babcock Energy, United Norwest Co-operatives Employees' Pension Fund, Fiat Common Investment Fund, Shepherds Friendly Life Society and Yorkshire Co-operatives Employees Pension Fund among others.