Lower equity pension funds may be missing a knock-on in returns

pensions

A recent poor performance by the FTSE 100 has caused pension funds to reduce their exposure to equities. But despite these risks, equities still offer the best prospects of achieving good returns

Notwithstanding the obvious risks involved in ordinary shares, a carefully constructed portfolio of quality UK and overseas equities offers the best opportunity of achieving a satisfactory return. This was the investment view taken up until the end of the last decade. At the end of 1999, with the FTSE 100 index at 6,930.2, most pension fund trustees and their investment advisers must have felt that all was well with the world. Over the previous decade, UK equities had seen outstanding returns. Including income, the market had delivered an annualised return of 14.9% per year and, more im...