News releases

Schroders FTSE DC report uncovers lack of diversification

Schroders is today announcing the findings of its secondi FTSE DC report, a project undertaken over the past three months which has studied the pension investment allocations of a selectionii of the UK’s top FTSE 350 listed companies.

23/10/2013

Schroders is today announcing the findings of its secondi FTSE DC report, a project undertaken over the past three months which has studied the pension investment allocations of a selectionii of the UK’s top FTSE 350 listed companies.

The report findings indicate that over the past twelve months 85% of the companies researched have not significantly changed their asset allocation. Of the 15% that have made significant investment decisions, few have diversified. Instead, the overwhelming majority of schemes continue to implement an approach that is highly equity dependent.

Looking at the overall annual comparison (2012 - 2013), typical asset allocation to equities of FTSE 350 companies remains at 84%. Within this there has been a fall of nearly 2% in allocation in UK Equities to 31% and Global Equity holdings have risen by almost 2% to 48%. Fixed Income weighting has reduced to 8% down from 9.2%. There has been no change in Alternatives with the average asset allocation at 8% over the past 12 months.

Specifically, FTSE 100 companies have only made marginal changes, with the largest being a 2% increase in emerging markets allocation to 5%. In contrast, FTSE 250 schemes have made greater alterations, with a 5% decrease in UK equities to 36% and 4% rise in global equities to 48%.

Stephen Bowles, Head of Defined Contribution, Schroders commented:

“Our FTSE DC research clearly illustrates that whilst some schemes certainly employ elements of diversification, few do so effectively. Instead the overwhelming majority of schemes continue to implement an approach that is highly equity dependent. It has been disappointing to see that there has been no change in the allocation to Alternatives over the past 12 months, a rather underutilised asset class.

“What is perhaps most interesting is that it is only in cases where a scheme has either replaced or appointed additional fund managers that progressive changes have been made to diversify – this represents 12% of all schemes. This is particularly significant as through their differing investment strategies, multiple managers add an additional element of diversity alongside allocations. It will be interesting to see if this is a trend that continues to develop in the months ahead.”

i First DC Report findings issued March 2013 - http://bit.ly/15zExzI

ii The DC default funds of 16 FTSE 100 and 9 FTSE 250 companies have been researched for this project. Information is correct as at October 2013. The research has been undertaken by The Wriglesworth Consultancy on behalf of Schroders

To receive a copy of Schroders’ FTSE DC Default Report, please contact:

Estelle Bibby, Senior PR Manager, Schroders

Tel: +44 (0)20 7658 3431/ estelle.bibby@schroders.com

Notes to Editors

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Schroders plc

Schroders is a global asset management company with £255.8 billion (EUR298.5 billion/$388.0 billion)* under management as at 02 July 2013. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.

With one of the largest networks of offices of any dedicated asset management company, we operate from 34 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.

*Source: Schroders, all data as at 02 July 2013, including Cazenove Capital assets under management

Further information about Schroders can be found at www.schroders.com.

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