Traditional asset classes bolster Belgian pension returns

BELGIUM - Belgian pension funds delivered median returns of 16.8% in 2005, a strong result due in part to continued investment in traditional asset classes, Mercer Human Resource Consulting has said.

Mercer’s study found 2005 returns were almost double the 8.6% generated in 2004, and that over the past 10 years the median fund had achieved an annualised return of 7.74%, which it said was healthy for a pension fund.

Willy Santermans, partner at Mercer, commented: “The strong results in 2005 are largely due to the fact Belgian pension funds continued to invest in their traditional asset classes. Following the stock market slump that started in March 2000 and lasted approximately three years, they maintained nearly half their assets in equities.”

Mercer found 53% of assets were invested in equities at the end of 2005. The bulk of assets in 2005 were invested in European shares (33.5%) followed by American shares (10.6%) and Japanese shares (3.3%).

According to the study, Japanese equities and emerging markets returned the best results, 44.2% and 49.1% respectively.

Mercer said real estate only represented 3.2% of the total pension fund assets covered by the survey.

Santermans added: “Taking into account the investments in real estate as well as liquid assets, the European region pulls in no less than 70% of Belgian pension fund investments.”

Mercer’s research was based on an analysis of 100 active funds, which represent two-thirds of the 150 active funds in Belgium. The study analysed 136 investment portfolios with total assets of e6.2bn.

By Lisa Haines

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