Pension funds have typically been conservative with where they choose to invest their funds. News has emerged today that one of the more conservative funds in the UK has decided to invest a 17.5% portion of it’s assets into hedge funds and alternative assets which will include insurance-linked securities. Berkshire County Council has a pension fund pot of £1.05b and some of that is now going to be invested in instruments such as catastrophe and mortality bonds.
Given the issues in financial markets it’s encouraging to see that large funds are still keen to diversify and see ILS as an alternative asset worth investing in. It’s also good to see that pension funds haven’t given up on hedge funds given the losses of the last year.