June 13, 2024
Stock Market

Hunt’s ‘Buy British’ stock market push risks hurting investors, warns Blackrock

Jeremy Hunt’s push to get more pension funds to “buy British” risks going too far and leaving retirees worse off, the world’s largest money manager has warned.

Blackrock, which looks after the pensions of one in five Brits, said it would be alarmed if the government forced funds to own a specific amount of UK stocks.

Such a move has been speculated after the Chancellor decided to force some pension funds to disclose how much they invest in UK equities.

Mr Hunt has been explicit in his goal of getting pension funds to invest more into British assets to boost growth and has pledged to take further steps if things did not improve.

It has prompted speculation the government could mandate that funds must have a certain percentage of assets invested in UK stock markets.

Antony Manchester, a former Treasury official and now BlackRock’s head of UK public policy, said he was concerned such a move risked leaving pensioners poorer in retirement.

Speaking at an event hosted by a think tank called Bright Blue, Mr Manchester said: “We look after the pensions of about 12m people here in the UK and we strongly believe that they are there to give people a decent retirement and therefore [we are] a little bit worried about suggestions that they might be forced to invest in assets that their managers don’t think are going to give the best returns for the end investor.”

City minister Bim Afolami, who was questioned by Mr Manchester at an event hosted at UK Finance, insisted the Government was not planning such a move.

He said: “I am not talking about forcing anybody to do anything. Transparency will be quite an important lever, that’s what we’re talking about. We are not going to mandate anybody to do anything.”

British pension funds currently have just 6pc of their funds invested in UK stocks, compared to 53pc in 1997.

Experts have blamed the decline on a wave of regulation that has pushed funds out of riskier stocks and towards safer investments such as bonds.

However, money managers have also turned their backs on UK stock markets after years of under performance. Coutts, the King’s bank, emphasised the trend last month when it announced plans to shift nearly £2bn out of the London stock market and into better performing overseas assets.

A BlackRock spokesman said: “We support measures aimed to attract and incentivise pension investment in the UK, which can help boost the economy whilst also delivering better retirement outcomes for end investors.

“However, it is essential that any calls for further investment in the UK are balanced against the need for pension schemes to make investment decisions based on the interests of their members.”

Mr Afolami also said he would do more to force regulators such as the Financial Conduct Authority to do more to boost economic growth.

Regulators have recently been ordered to take the UK economy’s health into account during their decision making.

Mr Afolami said: “Be assured, we will go further if needed, if things are not developing in the way that we would all like to see.”

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