UK pension schemes are looking to increase their exposure to infrastructure, according to a survey from State Street, but have found a dearth of appropriate investments.

State Street Corporation’s survey, the UK Pension Fund Universe for 2014, said exposure to alternative assets remained broadly static at around 10% of the average fund but the mix is slowly changing with infrastructure and diversified growth (multi-asset) products gaining traction.

David Cullinan, vice president at State Street Investment Analytics, told Markets Media that UK pension schemes want to increasing exposure to infrastructure but there is a lack of appropriately priced supply. “There is money waiting to go into the sector but there is a dearth of appropriate investments,” he added.

Three quarters of all UK pension funds have exposure to property, which makes up around 7.5% of the average fund, close to its highest ever level. “Property investment saw the recovery in this sector that had begun in 2010 continue with an excellent 16% return for 2014,” said the report.

The survey covered all public and private defined benefit scheme UK schemes – about 200 funds who manage £510bn in assets – with 65% from the corporate sector and the remainder in the public sector. Cullinan said the key difference between the types of the scheme was that public sector defined benefit schemes are still open to contributions while private schemes are not, so they are more risk-averse and invest more in bonds.

Corporate funds hold an average of only 34% of their assets in stocks but local authority pension schemes still have a commitment of just over 60% to equities.

State Street said: “In the two preceding years a high equity allocation was beneficial but in 2014 it was funds that held a relatively high proportion of their investments in bonds that will have performed best.”

UK defined benefit schemes returned an average of 11% in 2014.

“A combination of disinvestment through the year and underperformance relative to bonds saw the average fund exposure to equities reach its lowest level ever at 43%,” said the report.

UK index-linked bonds returned 20% last year despite falling inflation and the average fund for UK gilts returned 18%. In comparison, UK equities returned just 1% in 2014. Last year took the five-year performance for UK pension funds to 9% per annum and the 10-year results to 8%.

Cullinan said: “These returns have exceeded actuarial assumptions but they have lower expectations of between 4% to 5% over the next few years.”

He added that majority of funds in the UK prefer active management for their equity portfolios and the interest in passive strategies had remained the same for the last decade. “There is pressure to explain why schemes have chosen active management rather than going passive,” he said.

Passive investments could increase as last May the UK government launched a review of the the Local Government Pension Scheme, which is managed through 89 regional funds, in order to save costs. The proposals include significantly reducing investment fees by using passive management for listed assets.

The consultation lasted until July 2014, and the UK government is still reviewing the responses.