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Santander’s director of pensions Antony Barker said: “This is largely attributable to few assets or asset classes experiencing any losses, and benefiting from having increased hedge ratios to around 70% in recent weeks.” He explained that the fund’s equity mandates were active, global and unconstrained, that private markets were largely unaffected in the short term and that the fund was only 50-60% currency hedged. Barker pointed towards some of the unknown elements that lay on the horizon. “Looking ahead, the major factor is uncertainty across various discrete but unknown time periods – before triggering Article 50, from trigger to exit and post exit, as well as a possible second referendum, or more likely a general election, before the trigger,” he said.
The Pension Protection Fund (PPF) said it would keep a close eye on events as they unfolded but that there was safety in its investment approach. “The outcome of the referendum will clearly have significant consequences, and we will be following developments carefully,” a spokeswoman for the UK lifeboat scheme said. “However, our long-standing low-risk approach and hedging strategy mean we are able to cope with the volatile markets we expect to see.”
At Santander, Barker said that, if history were any guide, the current uncertainty in the wake of the referendum would probably prompt other investors to sell at discounted prices, and that there were suggestions real estate might correct by 15% or more. “We’ve no need to generate additional liquidity or make sales, so we will be more likely to be net investors,” he said. Because the pension fund’s portfolio is largely driven by global stories and non-European considerations, Barker said he did not foresee any changes being made to the long-term strategy.
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