The government-funded Environment Agency £1.1bn pension fund said yesterday that it plans to cut its British holdings to just 31.5% and increase investments in global shares to 31.5% from 20%, following a run of poor performances.

The fund, one of the biggest in the country, has traditionally invested at least half of its money in UK-quoted companies. It will also switch more cash into bonds, property and private equity, which is likely to include hedge funds.

The move is a major blow for the previous managers of the money, London-based investment groups Legal & General, Henderson and Merrill Lynch. Biggest winner is Hermes Pensions Management, which will pick up £425m, largely transferred from Legal & General.

Guardian Unlimited © Guardian Newspapers Limited 2005