In a survey of more than 570 European pension funds, Mercer Investment Consulting found that European pension funds are managing the risk in their portfolios by diversifying their investments and placing more money in alternative assets.
The funds surveyed cover over EUR364 billion and also found pension funds are emphasizing active manager strategies to enhance returns.
According to the survey, the UK and Ireland have the highest equity exposure in Europe, with 62% and 60% respectively.
However, French pension funds invest just 28% in equities while Germany, the Netherlands and Switzerland invest 31%, 33% and 33% respectively.
But funds in these countries, the survey shows, give higher allocations to bond markets.