Robert Gardner, Redington Partners

Pension schemes can incorporate FoHFs into their asset mix in order to optimise the scheme's fuel efficiency. To achieve this schemes must first decide on strategic asset allocation and the proportion of assets to be allocated to FoHFs. An optimal allocation will increase the diversification of the portfolio and reduce volatility and drawdown risk of the asset returns, and therefore the overall level of risk undertaken. The scheme must next decide on the most appropriate FoHF - a decision usuall