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Czech funds meet need for positive return

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  • Czech funds meet need for positive return

CZECH REPUBLIC - Only two funds in the Czech Republic private pension sector managed to generate a return above 1% last year, but all at least delivered positive performance as the other eight just scrapped the zero mark.

All Czech pension funds are required to balance incurred losses with their own assets so the annual result had to be positive albeit very little. (See earlier IPE story: Czech pension funds will return 0% - APF)

“It is true that the average portfolio performance is likely lower than the average return for clients coming from the profit/loss account,” Petr Benes, head of the Czech pension fund association APF, confirmed to IPE.

However, he added, the published figures were the only ones available to the association.

Aegon, ING and AXA closed the year with a 0% performance, and five other funds ended the year below 1% return, against an average return in 2007of 2.91%, according to statistics compiled by the APF.

Only Allianz (3.4%) and Generali (2.3%) managed significantly higher results and Allianz achieved this by continuing to hold 98% of its assets in bonds and the rest in cash while Generali too had a high exposure to bonds (86.4%).

In all, the equity weighting in all 10 pension fund portfolios combined fell to 3.1% from 6.1% the previous year while the bond exposure climbed to 79% on average from 74%.

Assets in the voluntary pension funds nevertheless increased from CZK162bn (€5.74bn) to CZK186bn as the number of participants in the system rose from just under four million people to nearly 4.3 million.

However, pension funds’ profits were down to CZK706m from CZK4.4bn by the end of 2008.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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