On the go: Diversification in Nest’s default funds seems to be paying off, as the government-backed workplace pension scheme has seen a decrease of 17.6 per cent since the beginning of this year, while the FTSE 100 has fallen by 34.3 per cent.
While this has been the loss for its default growth phase fund, Nest’s other main funds have registered even smaller decreases. Its default foundation phase fund, for younger members, declined by 13.3 per cent, while the default consolidation phase, for individuals retiring this year, dropped 0.6 per cent.
Equity markets have been reacting to the Covid-19 outbreak, which was labelled a pandemic by the World Health Organization at the start of March as more than 100 countries have registered cases.
Nest stated that due to its diversification strategy, most of its members’ pots “will not be experiencing the extreme stock market volatility that has been reported in the news”.
Mark Fawcett, chief investment officer at Nest, said: “Pension saving is a long game – people can be saving for up to 40 or even 50 years – so while we’re keeping a close eye on current events, our focus is the long term.
“At Nest, we’ve prepared for situations like this by diversifying our default funds so they are not overly reliant on any one asset class.
“We’re in a good position to be able to increase our equity allocation while markets are down, and therefore help our members benefit when markets begin recovering.”
