Economic commentators in 2013 often swayed in the wind over the course of the year. Equity markets went from bull to bear, and back to bull again, as emerging markets felt the stinging chaos of capital flows, in both directions.

Fixed income, depending on where allocations were made, presented a mixed story. Spreads between core European market government yields and the periphery began to narrow, as did those against corporate bonds.

In 2013, investors adopted a calmer approach to equity markets, as economic recoveries took hold, backed by a sense the crisis in the euro-zone was ending. However, asset returns across the continent varied.

As results were announced over the beginning weeks of 2014, one thing became clear – asset allocation was key. While this might seem somewhat obvious, allocations to subsets and marginal asset classes made a real difference to overall returns.

In The Netherlands, two of the largest schemes reported positive returns. Equity returns, which reached beyond 20%, were key. The €300bn government employee pension fund ABP said its 22.1% return from developed market equities helped it to produce a 6.2% return over the year. However, it suffered from falls in emerging market holdings.

PFZW reported a lower return of 3.7% but from varied sources. Listed equity returned 21.3%, with additional strong returns from private equity, structured credit and property.

As many of the funds across Europe had to contend with a drop in the value of fixed income, with yields rising from historical lows, ABP was one of few to buck the trend. These low yields in core debt markets resulted from well-documented inflows during the 2011 euro-zone crisis.

However, in 2013 it was yields in the peripheral debt markets that fell. Investors regained confidence, and ABP’s allocation of €34bn to bond markets in Spain, Italy and France returned an additional 2%, on the back of rising value.

Fellow Dutch schemes PMT and PME, with combined assets of more than €70bn, returned 1% and 0.9%, respectively.

PME’s low-risk equity investment was held responsible. The scheme fell victim to the regulatory solvency trap, where protective de-risking requirements take precedence, but restrict asset growth.

Furthermore, it lost value on fixed income, but gained 1.3% return on its property portfolio.

Looking North, Finnish and Danish schemes continued to demonstrate the Nordic appreciation for risk assets.

The €37.8bn Keva scheme returned 16.6% on equity, combined with strong returns from its alternatives portfolio, with 14% from private equity and 11.8% from hedge funds. However, further diversification hampered returns, with its commodities portfolio down 3.6%.

The €32bn Ilmarinen scheme, the €18bn LocalTapiola scheme, VER and Veritas all returned 5-10%. Equity portfolios once again led the way, delivering 14-18% over the year. In line with their desired exposure to risk assets, the schemes also enjoyed relatively good returns from their property portfolios of 5-6%.

However, fixed income presented a different picture. With the exception of Ilmarinen, whose portfolio returned 4.5%, the schemes did not fare well. VER, which has half its portfolio in fixed income, lost 1.6%. Keva, Veritas and LocalTapiola all suffered returns below 2%.

However, one scheme in Finland that did not fare well was Etera. Like its Dutch counterparts PMT and PME, Etera returned less than 1%. Etera CIO, Jari Puhakka, said the scheme incorrectly predicted its tracking error and forced a shift in focus to volatility control.

In previous years, the scheme greatly benefitted from tactical trades in emerging market debt, but attempts to replicate this resulted in a loss in 2013.

Danish funds continued the trend. The €89.1bn ATP fund reported a return of 14.5% growth over 2013, as well as 52% growth on its domestic equity portfolio. However, it also incurred significant loses on its interest rate hedging.

In total, PKA, the €26.1bn fund, returned 9%, mainly from a 22% growth in its passive equities portfolio, and 9% from fixed income, with tactical investments in markets where yields fell.

In Switzerland, Publica, the €29bn public pension fund, returned 3.5% as a result of strong returns on its 33% equity allocation. However, 10% was allocated to emerging markets affected by the taper-tantrum. It also suffered from allocations to core euro-zone bonds, emerging market debt and commodities.

Fellow funds BPK and PKE had equity exposures of 39% and 38%, respectively, which helped them to 9.3% and 8.8% overall returns. PKE gained additional returns from all allocations with the exception of foreign bonds, which fell in value.

Olivier Lebleu, head of business development at Old Mutual Asset Management, says expectations from across other markets would be in-line with what has been seen. “What will help the UK scheme returns was the move to global equity mandates around 10 years. This is now well established. Therefore, a lot of the mandates are structured to capture mainly developed market exposure, with some emerging markets. But it is rarely a pure-play allocation, so the correction in emerging markets will not have a huge impact.”

Across Eastern Europe and Austria, industry surveys highlighted timely growth. Lithuania’s Central Bank said 27 of its 28 pension funds saw positive returns in 2013, as equity exposure increased across the board, with average returns of 4%.

Austrian pension funds, which allocate around 56% to fixed income, earned returns primarily from the non-core euro-zone debt markets, similar to ABP and PKA. The average return for the country’s pension funds was 5.1%.

As recent history goes, many schemes will look on 2013 positively. While fixed income still respresents the majority of allocations, the value of risk assets proved better than many had predicted.