Skip to main content Accessibility help
×
Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-10T21:38:48.766Z Has data issue: false hasContentIssue false

3 - Pension funds and the capital markets

Published online by Cambridge University Press:  05 July 2011

Get access

Summary

Pension funds and long-term investment

It is estimated that pension funds globally manage investments aggregating some $20,000 billion. In the United Kingdom, the figure is less than $2,000 billion, but pension funds are still major players in the sterling markets. How pension schemes are governed in terms of investment strategy can therefore be extremely important for the efficiency and structure of the global capital markets.

Pension funds have enjoyed the status of being the ultimate in long-term institutional investors (although in recent years certain sovereign wealth funds have acquired a potentially similar position). It can be argued that pension funds have the long-term strength to accept short-term risks, especially in the equity markets. However, the application of this approach has varied greatly over recent decades. Recently, mainly due to rising costs and tougher regulation, many corporate sponsors have begun to consider winding up their pension schemes or buying out part of their pension liabilities through transactions with insurance companies. Such measures emphasise the short rather than the long term.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Dimson, E.Marsh, P.Staunton, M.Global Evidence on the Equity Risk Premium 2003 15 Journal of Applied Corporate Finance27CrossRefGoogle Scholar
Bond, T.Equity Gilt Study 2009Barclays Capital 2009Google Scholar
Exley, J.Mehta, S.Smith, A.The Financial Theory of Defined Benefit Pension Funds 1997 3 British Actuarial Journal835CrossRefGoogle Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×