The Belgian Pension Funds Association published its 1996 results last month showing average returns of 14.5% for the 130 funds included, but association president Hervé Noel has warned that funds cannot rely on such a scale of increase in future.

Noel stressed that there was no reason for pessimism but that funds should be cautious about extrapolating the results.

In another survey covering 80 Belgium funds, the William Mercer Pension Investment Performance Service (PIPS) showed an overall increase of 15.5% for the median fund in 1996, up from 9.6% in 1995. The survey, now in its tenth year, covers funds with assets of BFr131bn.

The association's previous year's survey showed an average increase of 11.1%. The average performance over 3 years was 6.2%, over five years 9.2% and over 12 years, since the performance survey began, 8.7%.

The average equity holding was 41.3% last year while the average equity holding for the last three years was 38.2% and for the history of the survey 25.7%, in what Noel described as a very steady movement, not a quick shift".

In the Mercer PIPS survey equity investments produced the best re-turns, with returns of 27.7% for Belgium and 19.2% for foreign equities. Domestic and foreign bond investments produced 10.6 and 13.7% respectively.

The Mercers survey showed a move of 2% from domestic bonds to domestic equity and of a similar amount from international bonds to equity.

While welcoming the results of the association's survey, Noel described the 12 years covered as "an exceptional period." He added: "You have to be realistic. You may have booked returns of 6% in real terms for the last 10 or 12 years but you shouldn't expect that result in future."

Noel pointed out that the risk premiums set on inflation of the sort seen in the early eighties and on a weak Belgium franc were now disappearing. Markets were increasingly confident that inflation had been capped while the Belgium franc had established a firm link to the Deutschemark.

This theme was adopted by several of the speakers at the conference which accompanied the presentation of the associations figures. "Some speakers gave a warning that in the long run investing in bonds should give a real return of about 3% while investment in equity should be something like 6%," he added.

John Lappin"