Pension Funds Across Globe Increasing International Exposure: Report

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More and more pension fund money is flowing overseas, according to a report released this week by PricewaterhouseCoopers that examines pension funds’ investment trends over the last 8 years.

Pension funds around the globe – but particularly in the Asia Pacific – have increased their allocations to international investments, including equities, real estate and foreign funds.

More on the growth of international investment, summarized by ISS-Mag:

In North America, pension funds’ overseas investments stood at 16% of the region’s total portfolio in 2008, reaching 21% in 2014.

In Europe, the average percentage of pension fund portfolios allocated to foreign markets increased from 32% in 2008 to 34% in 2014, with the Netherlands, Finland and Portugal investing the highest percentage of their pension fund portfolios overseas in the last six years – in the Netherlands foreign investment reached 76% of the country’s total portfolio in 2014.

Asia Pacific’s pension funds invested, on average, 19% of the region’s total portfolio in foreign markets in 2008, and expanded that to 31% in 2014. Hong Kong and Japan are the most aggressive investors in foreign investments within Asia, with Japan’s pension fund allocation to foreign markets rising from 16% in 2008 to 32% in 2014.

Dariush Yazdani, Partner of PwC Luxembourg Market Research Centre, adds: “The unique ability of pension funds to focus on long-term investments allows them to absorb short-term volatility while bearing market and liquidity risk through diversification – one of the most effective means of achieving diversification is through foreign exposure.”

Read the full PwC report here.

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