UK - Poor performance in bonds and index-linked stocks saw pooled pension funds return 0.7% for the second quarter of 2004, new figures from Russell/Mellon reveal.
Its CAPS survey shows that while UK and overseas equities achieved returns of 2.2% and 1.5% respectively, UK bonds (-0.8%), overseas bonds (-2.2%) and index-linked gilts (-0.4%) all struggled.
Property was the strongest performer over the quarter, providing returns of 5.5%. Cash returned 1%.
Russell/Mellon publications and statistics manager Daniel Hall said: “While balanced pooled fund performance in quarter two was not spectacular, this was the fifth consecutive positive return.”
There were mixed results with the overseas equity markets. Sterling fell against the dollar and the euro, resulting in European (4.2%) and North American equities (2.7%) providing the best returns.
By comparison, Japanese equities returned -2.4%, Pacific ex-Japan -3.6% and emerging markets produced the poorest market performance of -8.4%. UK equity managers underperformed the FTSE All-Share Index for the quarter with an average return of 1.4% against the index return of 2.2%. It continues their record of underperformance over the last 12 months, with an average return of 16% against the index of 16.9%.
Over the medium-term, however, these funds continued to outperform. Over three years, equity managers returned -0.3% a year on average against -3.5% for the index.
UK smaller companies managers were more successful, beating the FTSE Small Cap Index over the quarter, the year and the last decade. Over the last 10 years the average return was 9.6% against 6.8% a year for the index.
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