Compounding this problem is the exodus of UK pension funds from UK equities. Twenty years ago, pension funds held around 40% of their assets in UK equities; today it’s closer to 4% as funds globalise their portfolios. Just this month we have heard that Scottish Widows are moving their allocation in UK equities to just 3%. Compare that with the likes of AustralianSuper, the country’s biggest fund and a national champion, which has over 20% of assets in Australian shares. The Chancellor’s commitment to creating UK ‘mega funds’ with the capability and risk appetite to back long-term investment in UK growth companies will hopefully make a start in reversing this trend – as well as getting those funds to measure and publish their commitment to UK equities. Given their generous tax allowances, it is incumbent on pension funds to invest over 10% in UK shares. I’d also like to see an expanded role for the British Business Bank – a success story which now provides 20% of UK venture funding. Why not extend its remit to listed businesses, similar to successful counterparts in France?
