Risk in transition

Pensions have scrambled to reallocate their assets in response to rises and falls in the equity and fixed-income markets. But large investment shifts expose managers to a host of risks. How do transition managers help investors make these changes while minimising their risk? By Naomi Humphries, with additional reporting by Navroz Patel

The adoption of mark-to-market valuation has led many pension fund trustees and plan sponsors to a painful conclusion: their schemes are chronically under-funded. Research by UK-based actuarial consultant Lane, Clark and Peacock, for example, indicates that, on average, the FTSE 100-listed companies’ pension schemes held assets for only £80 of every £100 of mark-to-market liabilities.

While it appears that UK-based pension schemes haven’t been as proactive in pursuing major asset