Strathclyde Battles Pension Funding Squeeze
The Strathclyde Pension Fund is currently faring well in emerging markets as it deals with the difficulties of changes to pension legislature.
The Strathclyde Pension Fund is worth around £10 billion, and has approximately 200,000 members. It has been viewing some measures of success in its holdings in emerging markets. The biggest holding of the pension fund is the investment trust of Genesis Emerging Markets. Between 2009 and 2010, Strathclyde viewed a very pleasing increase of 141% in this holding. This means that though the original book value only stood at £13 million, Strathclyde are now enjoying a massive increase to £108 million.
The Strathclyde Pension Fund also has other large holdings; Nestlé, which stands at £43 million, Atlas Copco and Samsung Electronic, both at £40 million, and Tesco at £34 million – the biggest holding the fund has in the UK.
“Putting us ahead”
Despite the past year’s success with Genesis, the fund has now seen a drop in share prices since December of last year. However, Strathclyde is already prepared for this and has acted appropriately. Colin MacKenzie, council spokesman, stated, “As a result of our rebalancing strategy we have been selling down the Genesis portfolio for roughly nine months, making some fairly sizeable redemptions, and probably putting us ahead of the current round of outflows.”
Speaking of his confidence for the future, he continued, “The benefit that we have is that while emerging markets rushes come and go, we obviously have the luxury of having quite a long-term strategy that lets us think more about the strengths that they have.”
Strathclyde has been a strong supporter of the pension reforms recently proposed by Lord Hutton, speaking of their necessity and benefit in the public sector. The fund is the 15th largest of its kind in the UK, and considering its strong performance, not just now, but over the last ten years, their confidence in a time of change and reform has been well-earned.
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