In past year, two thirds of pension funds fired an equity manager while a fifth hired an alternatives manager
Sep 29th, 2009 | Filed under: Institutional Investing, Today's Post
A report issued last month by Watson Wyatt says that “In light of the economic crisis, corporate pension funds are taking steps to reduce their exposure to risk…”
It might come as a surprise that this de-risking is being carried out by actually increasing idiosyncratic (alpha) risk while simultaneously decreasing systematic equity (beta) risk.
The series of pie charts from the report below show that the percentage allocation to alternatives increased by about 6% last year and is pegged by Watson Wyatt to rise another 12% in 2010. Meanwhile, allocations to equities fell by 12% over the past year (helped by the downdraft in equity values) and are forecast to fall by another 6% in 2010. More…
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