UK investors expected to increase DGF use in future

UK pension schemes will increase their use of diversified growth funds (DGFs) according to AXA Investment Managers. Its view is based on a recent survey of over 150 consultants and pension funds on DGFs, which aim to use a range of assets to produce growth with low volatility.

The survey found that nearly half of defined benefit schemes use more than one DGF; using more than one to reduce risk, diversify manager exposure and to give access to more asset classes. Two-thirds of DC schemes with over £250 million in assets held two or more DGFs, again to reduce risk and increase manager exposure. And over two-thirds of consultants recommend that funds use more than one DGF.

AXA Investment Managers head of UK institutional, Maddi Forrester, commented: “De-risking is the primary objective for the majority of UK schemes, and trustees and pension managers are always looking for new methods of diversifying between asset classes with a value for money product, which we believe the ‘next generation’ DGFs offer.”