BELGIUM - Belgian pension funds achieved a median return of 8.6% in 2004, partly through maintaining their weighting in traditional asset categories like equities.
Mercer Human Resource Consulting surveyed 106 active Belgian funds with collective assets of e5.6bn, covering about two thirds of the market. The firm found Belgian pension funds maintained nearly 50% of their assets in equities, despite the market slump between 2000 and 2002.
“This choice was duly paid for in 2001 and 2002 with negative returns of negative 4.9% and negative 16.1% respectively,” Mercer said. “Nevertheless, this perseverance has allowed them to gather a return of nearly 10% in 2003 and 2004.”
The 8.6% return was just below the 9.6% return posted by Belgian pension funds in 2003.
Over the last 10 years, the median fund achieved an annualised return of 7.06%, with highs topping 18.8% in 1999 and lows reaching negative 16.1%.
“The decent result of 8.6% of the median fund in 2004 can mainly be attributed to the investments in European shares (13.2%) and to a lesser degree to investments in real estate (25.7%),” Mercer noted.
“The investments in American shares (2.2%) rather slowed down the returns. The bonds also had a fairly decent return of 6.7%.”
Real estate performed strongly, posting a return of 25.7%, and consistent returns over a three-year period. However Mercer noted real estate only represents 2.8% of the total assets.
Domestic markets posted the highest returns for funds with Belgian equities returning 37.4% and Belgian bonds 7.1%.
Mercer said shifts in the portfolios in 2004 were limited, with most funds maintaining a set asset allocation throughout the year with only minor adjustments.
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