Corporate bonds | Cover story


Sometimes in life, you do not get rewarded for doing the right thing. Since 2009, defined benefit (DB) pension investors from all over the world have been quickening their portfolio shifts from risky stocks to more stable bonds to avoid falling victim to another mar- ket crisis – only to potentially end up in one. Over the past 10 years, UK pension funds have moved 10% of their portfolios out of equities and into fixed income, according to Mer- cer’s 2018 European Asset Allocation Survey. Now making up half of the average pension fund holding, this allocation is mainly held in government bonds, but these investors also hold a third of it in domestic and corporate issuance.


This should come as little surprise. The yields on gilts of all dura- tions have more than halved in the past decade, according to the


Issue 83 | April 2019 | portfolio institutional | 35


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