Portugal- Despite positive returns of 3.9% in the last quarter of 2001, Portuguese segregated pension funds obtained a median investment return of –2% for the year, according to a survey by Watson Wyatt in Portugal. Both Q1 and Q2 in 2001 showed negative returns of –2.1% and –3.6% respectively.

The survey covers 178 pension funds – including segregated funds, pooled funds and third pillar personal saving plans – with assets of €13.7bn. This represents 93% of the total market value of pension funds in Portugal.

In terms of asset allocation, the fixed income part of Portuguese pension funds portfolio continues to be large, representing 51% of total assets. This percentage is similar to that registered at the end of 2000 – 49% of total assets- although there has been same changes in strategy. At the end of 2000 the proportion of total assets invested in public debt in the Euro-zone was 20%, whereas 12 months later these assets accounted for 27.4% of the portfolio. Other euro bond investments represented 29.9% of assets in Dec 2000, decreasing to 23.6% at the end of last year.

On the equity side, the trend towards the reduction in exposure to Portuguese equities that started with the euro advent continued during 2001. Portuguese stocks, that registered a negative return of –17.4% last year, represented only 6.7% of total segregated pension fund assets in December compared to 9.8% at the end of 2000.

On the other hand, investments in equities in the Euro-zone grew from 14.9% in December 2000 to 16.6% at the end of last year. During the same period, the exposure to other international equities also increased but only slightly from 4.8% to 5.5% of total assets.

According to the Watson Wyatt survey, interest among pension funds in Portugal in cash and other money market investments went down from 12.1% to 9.8%.