NETHERLANDS - Commodities and hedge funds buoyed disappointing returns from Dutch pension funds in 2002, according to figures from the WM Company.
Funds yielded an average -8.1% last year, hit largely by plunging stock markets values.
WM surveyed 98 pension funds excluding giants ABP and PGGM because their sizes would skew figures.
The overall return on share portfolios was –30.5%. North American equities performed worst with –33.9%, followed by European equities ( –31.5%) and Pacific and Emerging markets which posted the best returns with –23%.
Plummeting prices on share markets were offset by positive results on alternative-, fixed interest- and property portfolios. Commodities and hedge funds posted +20.6% returns, despite only representing 1% of the WM universe. Fixed interest securities yielded an average 7.5%, led by a 9.3% return on eurobonds. International bonds, on the other hand, gave a marginally negative yield (–1.3%). Returns on property portfolios averaged 5.1%.
Despite a fall in equity weightings from 44% in 2001 to 36% in 2002, pension funds increased their share purchases.
“From the point of view of spreading risks as well as of yield prospects, a portfolio of shares is essential,” said the Dutch Association of Industry–wide Pension Funds (VB) and the Dutch Association of Corporate Pension Funds (OPF).
“Yields on investment are uncertain. That is as true of equities as of other categories of investment. The positive return on bonds was due to falling capital market interest rates. The yield on property was weaker by comparison with previous years.”
They added: “Pension funds invest on the long term. Results over any one year should therefore be placed in a multi–year perspective.”
The E142m pension fund for IT company Bull was the best performer (+2.7%). Conversely, IBM’s massive E2.1bn scheme posted the worst performance with -16.1%.
Over the past ten years Dutch pension funds have booked average returns of 8.0%. That figure breaks down into a yield of 9.0% on equities, 7.8% on fixed interest securities and 10.9% on property.
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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