EUROPE - Investors are regaining their trust in equities and many pension funds plan to increase their holding in listed stocks over the course of the year, a study supported by IPE has revealed.

A survey of 78 European pension funds in 16 countries found respondents expect to increase their equity holdings by almost five percentage points by the end of 2010.

The Global Pension Survey (GPS) was conducted by Tilburg University in the Netherlands, in association with IPE. It also found the strong returns witnessed in the last quarter of 2009 are expected to continue, and respondents predicted they will see average growth of 5.1% across all pension assets in 2010.

While the estimated return is significantly down from the average 12% return seen in 2009, it would leave many schemes in better shape than the high losses they suffered in 2008.

However, while respondents predicted they would invest more in most asset classes - most notably bonds are expected to generate 4.4% growth alongside 4.8% from equities - real estate has fallen out of favour somewhat, as the 78 respondents to the survey on average said they would choose to pull back from investing in property and instead keep their cash investments level.

Retaining their cash investments is perhaps not surprising as, when prompted on their main concerns for the upcoming year, almost two-thirds cited both cover ratio concerns and the ability to effectively manage risks.

At least 55% of respondents also said longer life expectancy is one of the main issues pension funds now have to contend with, along with the increasing relevance of liability-driven investment, as cited by almost two-thirds of respondents.

Results of the GPS survey are now available online and the study will be conducted quarterly.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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