UK – Pension fund returns in the UK surged to 5.1% in the second quarter, bringing first-half returns for 2005 to 7%, according to WM Performance Services.
North American equity produced a return of 7.7% in sterling terms, due mainly to dollar appreciation, while UK and continental Europe posted returns of 4.7%, according to WM’s quarterly pension fund survey figures.
The best performing equities were Pacific Rim, which returned 9.6%, in sharp contrast to Japan’s 2.2% for the quarter. Bonds produced over 5% and property was slightly under 5%.
The survey, which covers 260 UK private and public sector pension funds with total assets of £389.4bn (€578bn), found that money continued to flow out of UK equities, with almost £1bn going to non-UK equities and a further £1bn to bonds and cash.
While funds’ overall exposure to equities was virtually unchanged, the effect was to reduce UK weights within portfolios by 1%, bringing the UK and international split closer to 50:50. Over £1bn moved from conventional UK bonds to index-linked.
“The absolute value of the average fund has recovered to its pre-crash level as at the end of December in 1999,” says Graham Wood of WM. He expected that there had been some recovery in funding levels, but the majority of funds still have a gap to close despite better investment returns and increased employer contributions.
WM is the European performance measurement division of investor services group State Street.
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