At the Conference of the Association of Superannuation and Pension Funds, the investment manager George Ross Goobey made a speech in which he pointed out that pension funds had a duty, not merely slavishly to match their liabilities with equivalent assets, but to target “the best possible results”.
Given the long-term nature of pension liabilities, such schemes, said Ross Goobey, would likely achieve superior returns not from investing in government bonds – which were the fashionable, conventional choice – but from buying stocks instead.
At the time, UK government bonds offered yields lower than those available in the stockmarket.
When Ross Goobey was appointed as the pension fund manager for Imperial Tobacco in 1947, the yield on UK government bonds, or gilts, was under 3%. Stocks at the time yielded more than 4%, and the British economy was growing strongly.
Tim currently works as director of investment at PFP Wealth Management, a UK-based investment and financial advisory practice which advises on and manages £1.5 billion in client asset. He is also a regular contributor of articles to MoneyWeek and to our Roundtable discussions. Tim runs an investment advisory service, The Price Report, especially for MoneyWeek readers – giving individual investors the chance to hear the very latest views, insights and specific tips from top-level City investors and professional managers. He also pens The London Investment Alert and The Price of Everything.
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