PensionsEurope Report on Pension Funds Statistics and Trends 2018
Today on 11 February 2019, PensionsEurope published its annual statistics and Report on Pension Funds Statistics and Trends 2018, and you can find them here.
The tightening monetary policy attracts more investments in bonds, and this applies for pension funds as well. However, many pension funds have indicated that they do not expect significant changes to their investments in sovereign bonds, and in some countries these investments are even expected to continue to decline in spite of the increasing interest rates.
Pension funds have increasingly moved their assets to equities or (from equities) to alternatives or they have invested more in both equities and alternatives. In some other countries, there has been an increasing interest in illiquid assets (such as private debt, private equity, and real estate). Pension funds do not aim to make significant changes to the share of their investments in public equities in the upcoming years.
Pension funds’ stabilizing and countercyclical investment behavior is expected to continue. The main risks to this behavior are the growing popularity of low-cost passive investments (although the rebalancing/countercyclical behaviour could very well be continued) and the gradual shift towards DC/hybrid schemes instead of DB schemes (although many DC schemes pursue a lifecycle approach implying a countercyclical rebalancing strategy). Furthermore, legislative capital requirements or accounting rules may drive pension funds away from equities (including long-term sustainable investments) in favour of other investments (including sovereign bonds).