UK pension fund West Midlands Metropolitan Pension Fund has said it will increase its allocations to private equity as part of a wider diversification to alternative asset classes.
The weighting change by the £7.8 billion (€11.6 billion, $16 billion) fund from 5 to 7 percent increases its allocation to private equity to over £500 million in the medium term.
“As a pension fund we are long-term investors and although due to problems in the debt market there will be more risk in the market, diversifying further into different asset classes is a sensible move,” said Judy Saunders, chief investment officer of West Midlands Metropolitan.
Her fund has invested in private equity for 25 years and it has been very satisfied by recent returns, she said. West Midlands Metropolitan will become the largest investor to the asset class across local authority pension funds, through the increase to £546 million.
According to PE Connect, a limited partner database owned and managed by PEO’s parent company, the two largest local pension funds Strathclyde and Greater Manchester plan to contribute £465 million and £400 million to private equity respectively.
Click here to find out more about PE Connect.