In the first part of our Lessons in Agility series, we saw how several large pension funds are shifting their approach to portfolio management to account for rising market uncertainty.

Senior leaders at CalPERS and Ontario Teachers’ Pension Plan have discussed the need for a more flexible investment approach amid the current volatile landscape.

But how widespread is this shift? And how can smaller pension funds with more limited investment and governance resources achieve greater agility?

For these schemes, delegation is increasingly important. “Many UK pension funds are quite small which means they often don’t have the governance or bandwidth to do a lot of tactical decision-making,” says Mark Hedges, former CIO of Nationwide Pension Fund and a professional trustee.

Hedges explains some smaller funds may delegate certain mandates to managers, allowing them significant flexibility over tactical allocation. And appointing fiduciary managers is becoming increasingly appealing to smaller schemes – a trend he expects to grow: “The governance of a pension scheme just makes it incredibly difficult to take tactical decisions itself. So, I suspect we’ll see more growth in funds being allocated to fiduciary managers.”

These managers will be given set remits and a target return, but within those parameters they’ll have the discretion to invest as they see fit to generate that return.

Currency hedging strategies are also being revisited by the pension industry as President Trump’s decisions on trade policy have contributed to the US dollar suffering its worst decline in more than 50 years in the first six months of 2025.

Indeed, the most recent CoreData Institutional Investor Pulse Survey finds that 69% of European investors making strategic allocation shifts in response to Trump’s trade policies are moving away from Treasuries and USD as safe haven assets. Furthermore, almost half of the overall global sample (49%) have already made tactical changes in response to US trade policies.

A European pension fund with around €5bn in assets made such changes. “In our last ALM study which we carried out last year, we discussed de-dollarisation, but no one expected it to go as quick as it has,” explains the CIO of the fund.

But the fund must account for making these shifts ahead of time; in this context, it applies a currency overlay with some tactical leeway, which allows the team to adapt to new scenarios.

In addition, there are important limitations within their investment framework. For instance, the fund runs a regular asset liability management cycle, and the CIO explains they hardly introduce new asset classes in the middle of a cycle: “I don’t really see us as a pension fund that will be nimble and swift to adjust to all different market changes or momentums. In the long run, strategic asset allocation is more important.”

As volatility becomes part of the status quo, pension funds are under increasing pressure to balance their long-term goals with short-term adaptability. Whether by working within their agreed guidelines or delegating mandates to fiduciary managers, these investors must prepare themselves to both weather the storms and take advantage of opportunities.

Angele Spiteri Paris is a senior research consultant at CoreData Group, a global specialist financial services research and strategy consultancy. To find out more about our industry insights and research programmes, you can reach her at [email protected]