BELGIUM - Belgian pension funds delivered median returns of +8.4% in 2006, according to the 20th edition of Mercer's annual Pension Investment Performance Survey.
Mercer's research is based on an analysis of 97 active funds, which represent two-thirds of the 150 active funds in Belgium. The study analyses 130 investment portfolios with total assets of €6.8bn. Over the past ten years, the median fund achieved an annualized return of +7%.
Mercer partner Willy Santermans said: "Although the return of 8.4% is only half of the excellent return of +16.8% achieved in 2005, it can still be considered a strong result. Especially if we compare this with the negative returns of -4.9% and -16.1% in 2001 and 2002 respectively.
"The positive results of the past four years are largely due to the fact that Belgian pension funds continued to invest in their traditional asset classes. Even following the stock market slump that started in March 2000 and lasted approximately three years, they maintained nearly half their assets in equities."
The driver for the result was returns of 22.6% in European equities and 48.5% in real estate respectively.
Real estate achieved excellent results for the sixth consecutive year in a row. In contrast to the nineties when real estate investments performed poorly, in 2006 they achieved an excellent result with returns of +48.5%. However, real estate only represents 3.5% of the total pension fund assets covered by the survey.
The study found that equities remain by far the most important investment category for Belgian pension funds, with 51.0% of assets invested in this category at the end of 2006. The bulk of assets in 2006 (32.6%) were invested in European shares, followed by American shares at 9.8% and Japanese shares with just 2.3%. The rest is invested in emerging markets (1.9%) and global equity funds (3.7%)
"Taking into account the investments in real estate as well as liquid assets, the European region pulls in no less than 75% of Belgian pension fund investments," said Santermans.
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