BELGIUM – Pension funds in Belgium produced average investment returns of 12.3% last year, while shifting their asset allocation away from bonds and towards equities, according to the Belgian Association of Pension Institutions (BVPI).

The provisional figures showed Belgian pension funds were investing the bulk of their assets in the real economy and that they remained long-term investors, the BVPI said.

According to data from a representative sample of the country’s second-pillar pension funds, at the end of December 2012, portfolios consisted of 37% equities, 49% bonds, 5% property, 4% liquidities and 5% ‘other’ investments – mainly infrastructure, private equity, insurance products and energy.

This compares with data for the first half of 2012, which showed that at that point pension funds had 34% of assets in equities, and 53% in bonds.

Philip Neyt, president of the association, said: “Belgian pension funds are investing more than 70% of their assets in the real economy.

“Thanks to their diversification and the stability of their asset allocation, as well as their long-term visions, pension funds are continuing to play their role as long-term investors.”

The 12.3% annual return had been achieved despite difficult circumstances on the financial markets – notably the crisis surrounding a number of euro-zone countries – and low interest rates, the BVPI said.

In 2011, the funds made average losses of 0.32% on investments.

Within fixed income investments, allocations to corporate bonds increased during 2012 at the expense of government bond holdings.

Corporate bonds accounted for 51% of all bond holdings, up from 47% at the end of 2011, while government bonds accounted for 49%, down from 53%.

This was the first time Belgian pension funds had invested more in corporate than in sovereign issuance, the BVPI noted.

At the end of 2012, total pension fund assets were €18bn.

The sample used in the survey included pension funds managing assets of €11.8bn – around 65% of the sector.