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Alternative Market Briefing

Diversified asset allocation strategies dominate UK’s defined contribution pension default funds

Wednesday, March 12, 2014

Komfie Manalo, Opalesque Asia:

Diversified asset allocation strategies dominate UK’s defined contribution pension default fund landscape, according to Cerulli Associates’ institutional report, European Defined Contribution Markets 2013: Winning With a Targeted Approach.

Cerulli surveyed European asset managers and found that two-thirds (66.7%) of managers expected diversified growth/asset allocation strategies to be the most popular choice, followed by lifestyle strategies (20%).

"Getting one's default fund strategy right is crucial for managers in the UK and Continental markets, because default funds take in the bulk of DC pension contributions," said David Walker, associate director at Cerulli Associates in London.

Target-date funds, which have been launched in Europe by some U.S.-headquartered investment managers, were favored by fewer asset managers (6.7%), but interest in this sector is expected to grow. Blended funds, with a significant portion of active and passive approaches, were also mentioned.

Laura D'Ippolito, a senior analyst at the firm, added, "Setting up a target-data strategy in the United Kingdom is much more complex than simply bringing over a successful strategy from the United States."

European fund managers said consultants would be the sales channel with the greatest potential for distributing their decumulation products over the coming three......................

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