PORTUGAL – Portuguese pension funds lost an average of 0.5% on investments in August, hit by negative returns from both shares and bonds in the month, according to Mercer.

In July, the country’s pension funds returned 1.5% on average, the consultancy said.

Rui Guerra, partner at Mercer in Portugal, said: “The negative performance of equity markets was mainly a result of growing political instability to do with the fear of military intervention in Syria.”

But investor uncertainty about the continuation of expansionary monetary policy and the outcome of the German elections had also weighed on sentiment, he said.

Bond market performance was negative in August in the wake of rising yields in the US and the euro-zone, Guerra said.

“Investors sold safer bonds in anticipation of stronger-than-expected economic indicators, and on the expectation that central banks would slow the pace of financial stimulus,” he said.

The benchmark discount rate for Portuguese pension funds – the yield on AA-rated euro-zone private debt bonds with maturity of more than 10 years – rose in August, Mercer said.

It climbed to 3.1% at the end of the month from 3% in late July, it said.