# 3 Pensions at a glance

Another reason why equities appear in relatively high percentages in the APCIMs model portfolios, and in those recommended in the Gregory and Rutterford questionnaire, is that the UK investment management industry prefers equities to bonds. The UK has a long tradition of equity investment going back to the South Sea Bubble in 1720 and beyond. Countries such as Germany, on the other hand, have a tradition of preferring bonds, also aided by history (the equity market collapsed under hyperinflation in the 1920s), and regulations may not allow insurance companies or pension funds in certain countries to buy equities at all.

## Activity 3 Pension fund reading

Allow around 30 minutes for the reading and activity below.

The OECD document ‘Pensions at a glance 2013’ shows that bonds and equities combined make up the highest proportion of pension fund portfolios. But, despite having similar investment objectives, pension funds differ a lot in terms of asset allocation across countries, especially in terms of bonds and equities.

Read pages 196-7 in Chapter 8 of Pensions at a Glance 2013. It shows that bonds and equities combined make up the highest proportion of pension fund portfolios. But, despite having similar investment objectives, pension funds differ a lot in terms of asset allocation across countries, especially in terms of bonds and equities.

OpenLearn - Asset allocation in investment
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