PORTUGAL - Portuguese pension fund performance continued to nosedive during the third quarter.
Watson Wyatt’s latest SEMP survey showed the median performance of all segregated funds managed on a balanced basis to be -2.4%. The increased spread between survey's median and weighted average, -2.4% and -3.3% respectively, indicated that larger funds suffered greater losses.
Year to date Portuguese pension funds have lost -2.1%. Over the last 10 quarters since April 1, 2000, only 4 have had positive median returns, and these were never above 1%.
According to Watson Wyatt, funds were rocked by sustained downward market movements, when several equity markets saw their indices fall back to 1996 levels.
On the political front, the Middle East conflict, possible war with Iraq, the outcome of the Brazilian presidential elections and lack of reform progress in Germany have all added to market uncertainty. Widening public deficits in France, Germany and Italy, together with increasing doubts over the Stability and Growth Pacts have also added to instability in the EU.
Other highlights included: - Total equity exposure reduced to 20.9%, almost 4% below 12 months' ago (24.7%).- Eurozone public debt has outperformed - over the quarter (+5.1%) and on the last 12 months (+9.0%). Portuguese equities were the worst performers with returns of -23.9% and -26.6%, over the quarter and on the last 12 months, respectively.- Most of the funds outperformed their respective asset class benchmarks', except for fixed income - credit, Portuguese equities and international bonds.- Personal saving plans (PPR/E) continued to produce positive returns, as they have to invest at least 50% of its portfolio in Portuguese public debt.
The survey polled 177 pension funds (including segregated funds, pooled funds and 3rd pillar personal savings plans, known as PPR/E’s), managed by 15 pension fund managers. The combined asset value of these funds is E12.9bn, covering some 93% of the total market value of pension funds in Portugal.
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