So says Glyn Owen, a leading investment manager who spoke at the recent annual Ashburton investment conference in Jersey.
As chief investment officer of Ashburton’s sister company, FirstRand International Asset Management, Mr Owen has tried to dig to the bottom of the ‘pension black hole’ and to find our why, in his words, ‘the City lost its way’.
In the 1960s and 70s, most pension funds were evenly balanced between equities and bonds yet in 2002 the average weighting was 78 per cent invested in equities and just five per cent in bonds,’ he said.
‘It therefore came as no surprise when bull turned to bear that funds started to suffer.
Managers thought they were spreading risk by diversifying internationally but they tended actually to increase risk by choosing more volatile stock.