Belgian active pension funds returned an average 8.6% in 2004 – buoyed up by returns in equities and real estate, according to Mercer Human Resource Consulting.
Mercer’s 2004 results are based on a poll of 106 of the country’s 150 active pension funds, with a total capital of €5.6bn.
“After the very poor three-year period from 2000-2002 with negative investment results, the Belgian pension funds have realigned with fine returns again,” the study said.
Belgian pension funds returned to positive results in 2003, of +9.6%, after three years of negative returns. The negative results started in 2000 (-0.1%). The bad news continued into 2001 (-4.9%) and 2002 (-16.1%).
But pension schemes held on to their 50% equity exposure in spite of poor returns, Mercer said. “This fine result is due in large part to the fact that Belgian pension funds preserved their traditional asset categories and their relative interests in each of them.
“Following the stock market slump they still maintained nearly 50%. This perseverance has allowed them to gather a return of nearly 10% in 2003 and 2004.” Mercer said the 2004 result can be attributed to European equities, which returned 13.2% and “to a lesser degree” to investments in real estate, which brought in 25.7%.
US equities, at 2.2%, “rather slowed down the returns” – hit by the dollar depreciation. The Belgian share market achieved the best result, with a return of 37.4%.
Real estate, 2.8% of assets, achieved “an excellent result” for the third year in a row, Mercer said, comparing the result with the 1990s, when real estate performed “poorly”.
Bonds returned 6.7%, with the euro zone performing best at 7%. But the dollar effect also hit US bonds, resulting in a negative return of 5.1%.
Over the past 10 years, Belgian funds have achieved an average yearly return of 7.06%.