ITALY- A strong message about market timing for pension funds came from David Spina, chairman of global custodian State Street this morning.

Addressing the fund forum conference in Rome, attended by 1000 delegates, he said: “take a look at long term returns from US equities and bonds. Of the 360 months between 1970 and the end of 2000, if you take out the 11 months in which equities performed most strongly, there was no excess over bonds.”

Looking at the 1990s’ bull market in equities, he pointed out that for investors who missed the best 1.5% of trading days during the decade would have made zero returns.

“One conclusion from the analysis is that you have to be ‘in to win’. There is no point trying to time the market because you are bound to lose.”

That, he said, carried a powerful message for pension funds with long term liabilities.

Speaking at the same forum, Gary Smith, head of alternative investments at ABN Amro in London gave a warning about hedge funds. “If the dollar weakens substantially it would have a serious knock-on effect for the market. This is because so many players are based in the US."

He saw an adverse impact on corporate bonds, mortgage backed securities and other assets used by hedge funds. “At the moment we are in a relatively high risk environment. This is something we must keep our eyes on.”