FRR, the €31.1bn French pensions reserve fund, has just given Pantheon Ventures, Access Capital Partners and Lehman Brothers International Europe €1.35bn to play with in the private equity markets, the €231bn Norwegian Government Pension Fund is planning its first foray into property, and AP2 – one of Sweden’s buffer funds – has confirmed it is following the infrastructure market “very closely”.

And the results of our latest quarterly investment survey (see page 14) confirm this trend. According to the survey, which polled 14 pensions and insurance funds with some €125bn under management, 64 per cent of investors plan to increase their private equity holdings over the next six months while 50 per cent intend to raise their infrastructure allocations. Our cover feature on page 25 finds out why infrastructure is so appealing.

“The next big thing will be investments in property and infrastructure,” says Martin Skancke, head of the asset management department at the Norwegian Ministry of Finance, which runs the Norwegian Government Pension Fund (see page 16). “The advice from the Central Bank is to have 10 per cent allocated to property but it will take time to get there.”

But which investment class will be the casualty of this push into alternatives. According to our survey, it will be bonds. While investors believe emerging market debt will be the most interesting bond class over the next six months, more than 50 per cent plan to cut into their fixed income holdings before year end.

Danish consultancy, Kirstein Finans, came to similar conclusions (see page 9). “The low interest rate environment has increased interest in alternatives,” it says. “Danish pension funds have now built up significant buffer zones and can start taking more risks. They are looking to decrease their allocation to bonds and increase their alternative holdings.”

That said, 42 per cent of respondents to our survey also intend to increase their exposure to equities before year-end with 57 per cent of investors believing that Asian and emerging market stocks will turn in 7.5 per cent over the next six months. One rather less optimistic investor, however, believes Asian stocks will generate a mighty -7.5 per cent.

Chris Newlands,
editor

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