GLOBAL - The United Nations Joint Staff Pension Fund (UNJSPF) lost over $10bn (€7.8bn), or around a quarter of its fund value, to end 2008 at $31.37bn.

Latest figures showed in the fourth quarter of 2008 the pension fund dropped 11.7%, or $4.13bn, even though it had reduced its equity allocation by 4.1 percentage points and reinvested this, along with some of its allocation to short-term investments, into bonds to bring its investment to 39.3%.

That said, the figures from the final three months of 2008 showed the fund outperformed its benchmark, of -12.7%, by one percentage point in the period, but the fund’s investment return for 2008 was -24.9%.

The fund confirmed the value of its assets fell from $41.7bn at the end of December 2007 to $31.37bn a year later, as the financial crisis effectively wiped almost a quarter of the fund’s value.

Despite the losses the UNJSPF, which covers 22 organisations and has more than 106,000 participants and 58,000 beneficiaries, offered some comfort as it stressed the scheme “had no investments with Bernard Madoff”.

In his annual letter to members, Bernard Cochemé, chief executive officer of the UNJSPF,also said: “It must be recalled that short-term variations in the market value of the assets of the fund are an inevitable result of fluctuations in the financial markets and in the value of the US dollar in relation to other currencies in which the fund is invested.

“Since the retirement and other related benefits of the UN pension system are secured through the assets of the fund, the long-term investment objective of the fund is to obtain an optimal investment return over the long-term while applying the criteria of safety, profitability, liquidity and convertibility,” he stated.

He highlighted the “cumulative annualised rate of return for the 48-year period ending 31 March 2008 was 8.8%”, which equates to an annual real rate of return of
4.4% for the same period, after adjustments for inflation.

Following the minor changes in investment strategy at the end of December 2008, the pension fund, which lost $1.5bn in the first half of 2008, had an asset allocation of 52% in equities, 39.3% in bonds, 3.3% in short-term instruments and the remaining 5.4% in real estate. (See earlier IPE article: UNJSPF drops $4.5bn in Q3)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Topics