William Wright, the founder of New Financial, said that any suggestion its members had \u201ca huge vested interest\u201d in DC schemes being required to increase their allocation to UK equities would be \u201cdeeply inaccurate\u201d, but declined to comment on the funding split between its almost 40 members.<\/p>\n
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A lack of demand for UK equities has led to companies being taken private and deterred private businesses from listing on the London Stock Exchange<\/p>\n
JEFF MOORE\/PA<\/p>\n
London is facing growing questions over its relevance as a global financial centre amid a dearth of IPOs and wave of takeovers. The market\u2019s woes are partly being driven by a lack of demand for UK equities, which has depressed valuations and led to companies being taken private and deterred private businesses from listing on the exchange.<\/p>\n
American equity markets have significantly outperformed the UK over the past 20 years, with the FTSE 100 rising 68 per cent in value, dramatically underperforming a near-450 per cent return from the S&P 500, which has been turbocharged by US technology giants.<\/p>\n
UK stocks currently account for just under 9 per cent of equity investments for DC pension funds, and 4.9 per cent of their overall assets, with non-UK equities accounting for 52 per cent of overall assets, according to New Financial\u2019s analysis.<\/p>\n
\u201cDoing nothing\u201d would see investment in UK equities fall to just 3.5 per cent of DC pensions assets as more funds shift to a \u201cglobal market-weighted\u201d approach, according to the report.<\/p>\n
\u2022 Yes, pension funds should be investing more in UK productive assets<\/a><\/p>\n Over the past 25 years the allocation to UK equities by all UK pension schemes, including local government and corporate defined benefit plans, has fallen sharply from just over half of all assets to 4.1 per cent.<\/p>\n