This paper shows the continued validity of the case for UK Pension Funds investing part of their portfolio in emerging markets in order to obtain an optimal risk/reward mix that will maximise return for any given level of risk. Having established the case, the paper will then look at the major factors that are preventing UK Pension Funds from investing more in Emerging Markets. Key among these is the strong preoccupation with short-term performance that not only acts to discourage investment in developing countries, but also fails to serve the long-term investment needs of pension savers. The paper will then put forward a range of policy options designed to address these problems, with the aim of encouraging UK Pension Funds to reach an optimal level of investment in Emerging Market assets.
Making the Case for UK Pension Fund Investment in Developing Country Assets.