Half (50 per cent) of pension professionals currently view inflation as the most important factor in defined contribution (DC) scheme investment performance, a poll has revealed.

The poll, which was conducted at the PLSA Investment Conference 2022, also found that a quarter (25 per cent) believed that geopolitical events were the most important factor, while 17 per cent felt it was regulation and 8 per cent cited interest rates.

“I’m not surprised at all to see inflation at the top of that list today,” commented Fisher Investments senior vice president, research, and Investment Policy Committee member, Aaron Anderson.

“This list might look very different at different times; today inflation of course is top of mind, monetary policy is top of mind.

“If you go back a couple of years to 2020, you’d put healthcare on this list, we were in the midst of a global pandemic. You go back a few years more, things like trade issues are probably weighing pretty heavily on equities.

“I think an important takeaway here is while one particular macroeconomic factor might be more or less important at any given time, and I think for all of you here if you think about the long-term prospects of a DC plan, things like interest rates and inflation have a big influence over what you are doing.”

A subsequent poll asked attendees whether the factors outlined in the previous poll were incorporated into the investment process of their managers.

In response to this, a third (33 per cent) said ‘yes – to a great degree’ and a quarter (25 per cent) said ‘yes – to some degree’.

However, 38 per cent said that their managers did not explicitly incorporate these factors into their investment process, while 4 per cent responded that they were not sure.

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