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Japanese equities help Belgian schemes post positive Q1 return

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BELGIUM - Pension funds in Belgium delivered an average return of 4.4% in the first quarter of 2010, according to a study by Mercer. 

Figures from the consultant’s pension investment performance survey (PIPS) showed the average asset allocation for Belgian schemes had slightly decreased equity investments in favour of bonds and alternatives. 

The average allocation comprised 48.1% in equities and 45% in bonds at the end of March 2010, against 48.7% in equities and 44.9% in bonds three months earlier. Property investments remained static at 2.5%, but alternative investments increased from 2.5% to 2.9%, while the allocation to short term assets also saw a tiny increase from 1.4% to 1.5% in the first quarter. 

Mercer’s analysis of 100 active funds, out of the 150 active funds in Belgium, showed the average return was 4.4%, with equities producing a return of 6.1%, bonds 2.9% and property 4.9%.  The figures for the average return on alternatives were not available. 

Japanese and US equities provided the best performance with returns of 14.8% and 11.7% respectively, although emerging markets also returned 9%, followed by European equities with a figure of 2.5%. 

The recent positive performance means over a one-year period the average return reached 30.3%, with 50.9% from equities. However, the overall return falls significantly to 3% over a five-year period and just 1% over the last decade. 

Willy Santermans, principal at Mercer, said: “The Belgian pension funds have continued to recuperate the loss made during the period July 2007 to March 2008 when the value of the funds decreased by 30% or so. They would actually need another 10% to come back to the value they had reached at the end of June 2007.”

That said, Mercer noted the average returns over a period of 15 and 20 years “looks much more acceptable” with returns of 6.6% and 5.9% respectively. 

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