Shell pension fund plans expansion with alternative investments

The Shell UK pension plan is likely to place five per cent of its assets in alternatives following a strategic review of its investment strategy.

A recent newsletter to members of the £10.6 billion contributory pension fund, which is one of the UK’s largest pension plans, revealed that five per cent of the portfolio will be allocated to hedge funds and other alternatives for the first time.

The letter explained that ’well-chosen hedge funds’ will provide ’diversification benefits’ in the face of volatile market conditions.

’Moving to the new strategic asset allocation will require a significant amount of sales and purchases of investments,’ the publication continued.

According to the Wall Street Journal, the hedge fund industry endured ’the worst period in its history’ during the financial crisis but is beginning to grow in stature once again thanks to a vote of confidence from major investors such as Shell.

The pension fund already has five per cent of its assets invested in private equity but intends to create a new standalone asset class known as ’alternatives’, which will also include infrastructure and commodity funds.
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