HSBC criticized for pension fund shift

| March 14, 2007 | 0 Comments

HSBC criticized for pension fund shift

HSBC (LSE: HSBA; Euronext: HSBC; NYSE: HBC; SEHK: 005) has come under fire for shifting some of its pension fund investment out of equities and into bonds. Keefe, Bruyette & Woods said that the shift brought increased risk to the fund.

HSBC announced the switch last week in its annual report, saying that it would reduce the proportion of its fund invested in equities from 47 percent to 12.5 percent. It will invest half of the fund in bonds, it said, 15 percent in cash, 10 percent in property, and 12.5 percent in emerging markets and other alternative assets. It said that the changes were an attempt to reduce volatility in its fund deficit and to meet its liabilities. That fund deficit was at $2.1 billion at the end of 2005 and it has committed to its elimination by 2015.

KBW, however, said that the shift away from equities was not an appropriate way to reduce risk. It said that the long duration of the risk should work to eliminate any short-term weaknesses in equity markets.


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