If you wanted to invest for the long term right now, what would you do? Would you a) buy as many bonds as you can get your hands on regardless of the yield; or b) go for a diversified portfolio weighted towards the asset classes that have a history of showing the best long-term growth? My guess is that most MoneyWeek readers would go for option b). But MoneyWeek readers clearly haven't been running the BHS pension fund.
A quick look at the fund's accounts to the year ending March 2015 tells you that, "with the assistance of an investment consultant", the trustees agreed on "a new asset allocation benchmark". The result? 81% of the assets were shovelled into the bond market, arguably one of the most overvalued asset classes ever (although also one that, to give credit where credit is due, had a fabulous 2014/2015). BHS isn't alone in doing this: all pension funds are working to "de-risk", and they are all doing it in much the same way (Matthew Partridge writes in this week's magazineon how we just love to "herd").
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