BELGIUM - Belgian pension funds suffered a negative return of 20.5% in 2008, the Belgian Association of Pension Institutions (BVPI) has revealed.

BVPI, which surveyed its members to map out pension funds' financial results in 2008, stressed no pension fund had liquidity problems.

The association said pension funds were mainly hit by the downturn in the financial markets in 2008, though added in comparison with the Bel-20 - the benchmark stock market index of Euronext Brussels which lost over 50% over the year - funds managed to limit their losses.

According to the BVPI, pension funds did change their asset allocation over the year as the average portfolio at the beginning of the year still contained 40% in equities.

"Remarkably, the surveyed pension funds announced they did not sell any significant amounts of equities in 2008. Instead, many funds decided as a result of the crash not to return to strategic levels of equities - no rebalancing of the portfolio," said the BVPI.

That said, the allocation to alternative investments has declined from 6.6% to 3.4%, while allocations to bonds and cash increased from 40% to 48% and 6.5% to 10% respectively.

The average portfolio at the end of December last year contained 30% equities, 48% bonds, 9% real estate, and 3% in alternatives such as hedge funds, private equity, commodities, insurance products and energy, according to the BVPI.

Belgian pension funds had generated an average annual return of 6.3% since 1985, while on a 20-year basis the average return was 5.3%.

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