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UK pension funds turn to alternative beta
01 April 2014
Ceri Jones investigates the trend for UK pension funds to offer diversified growth and alternative beta funds in
place of more expensive alpha-based products
UK pension funds
Humble pension funds targeting retail investors increasingly
mirror the cutting-edge investment thinking of major public
pension funds in Denmark and the Netherlands that lead the way
in private pension provision.
One of the biggest growth areas in the UK defined contribution
(DC) market in recent years has been diversified growth funds,
which promise equity-like returns with low volatility.
Diversified growth is a wide umbrella term and some of its
constituents are more tactical than others. They use
derivatives to varying degrees, but they share the imperative
to diversify across a range of asset classes, a principle
espoused by huge funds such as ATP, at $111.8bn the largest and
oldest pension scheme in Denmark, managed on behalf of 4.7
Further, like ATP, some diversified growth funds are now
beginning to step up to the next level and are exploring
so-called alternative beta strategies.
The term alternative beta...
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