British pension agency will invest in private equity, infrastructure
65% of PPF portfolio would remain invested in cash and bonds
London: The British agency which takes over underfunded defined benefit pension funds when their sponsor goes bankrupt said it would invest in private equity and infrastructure to seek higher returns.
The Pension Protection Fund (PPF) yesterday said it had changed its statement of investment principles to outperform benchmarks during the year by 1.8 per cent, rather than the current target of 1.4 per cent.
"Our portfolio is nearing the £4 billion (Dh22 billion) mark which means we now have far more opportunity to diversify our assets and greater buying power than ever before," chief executive Alan Rubenstein said.
The PPF said it would maintain its "low risk approach to investments" and at least 65 per cent of its portfolio would remain invested in cash and bonds.
The fund has also extended its commitment to responsible investment principles from British equities to global equities and said it would incorporate these principles "across all assets, including any new asset classes in which it invests".
Tactical asset allocation
In a previous revision last July, the PPF announced the introduction of tactical asset allocation to expand its investment horizon.
The PPF was set up in 2005. It finances itself by taking over assets and liabilities of the pension funds that fall under its jurisdiction and by charging British schemes potentially eligible for its help a levy which reflects their financial shape. In November, the scheme said its deficit more than doubled to £1.2 billion in the year to March 2009 but a month later hired three global equity managers to prepare for a near threefold increase in assets to £10 billion.
