PORTUGAL – Portuguese pension funds saw their may returns come in seven times higher than the previous month thanks to a recovery in international equity markets.

According to Watson Wyatt’s monthly estimate of Portuguese pension fund returns, last month pension schemes recorded average returns in the region of 1.5%. The figure compares with April’s 0.2%.

“May was a good month, after the negative mood of the last two months,” Watson Wyatt said.

International equities, which make up 6.7% of an average Portuguese fund, returned 6.5%, the highest asset class return in May.

The consultant said the positive outcome was mainly due to the broad recovery in equity markets, excluding Portugal, prompted by corporate earnings and by the taming of inflation expectations.

Euro equities, which count for 8.9% of the average portfolio, returned the second highest rate 5.7%. International bonds produced the best result within the asset class with 3.3% returns, compared with 2.6% in April.

Funds of hedge funds ‘s performance remained stable at 0.5%, while the inflation rate decreased from 0.7% in April to 0.5% in May.

But in spite of the positive global results Watson Wyatt added that “some key events” had had a negative impact. It mentioned the French EU constitution vote.