Spain’s corporate pension funds continued their recovery from last year’s COVID-19 slump, returning an average 10.16% for the 12 months to 30 June 2021, according to the country’s Investment and Pension Fund Association (Inverco).

This compared with 13% for the 12 months to 31 March 2021.

The results brought the average annualised returns for Spanish occupational funds to 4.01% for the three years to end-June 2021, and 3.60% for the five-year period to that date, said Inverco.

Xavier Bellavista, principal at Mercer, said: “The speed of the recovery from March 2020 has been very strong, the median performance in the last five quarters being 11.5%, with some fund portfolios incorporating high risk gaining more than 21%, while even the most defensive ones have made a very interesting 4.8% return over the same period.”

Those returns were recorded by Mercer’s Pension Investment Performance Service (PIPS), which covers a large sample of pension funds, most of them occupational schemes.

Inverco’s figures showed that for pension funds as a whole, fixed income fell further in percentage terms over the second quarter of 2021 to 39% of portfolios.

Non-domestic equities are entrenched as the largest asset class overall, rising to a 26.1% allocation. Domestic equities have fallen back to 13.6% of portfolios, behind Spanish government bonds at 14.7%, while Spanish corporate bonds make up 13.4% of assets.

Mercer’s PIPS figures for asset allocation by Spanish corporate pension funds show that at end-June 2021, equity and alternatives exposure were the highest they have been since the beginning of the pandemic. Equity exposure was close to 30% of total assets, with non-eurozone equities increasing in importance at the expense of euro zone assets.

“Within alternatives, absolute return is the asset class which has increased its exposure by the greatest percentage,” said Bellavista.

He said that during the second quarter of 2021, the exposure to euro zone fixed income, especially government debt, was significantly reduced, while euro credit, and more especially non-euro fixed income, has benefited from part of that reduction.

At the end of June 2021, Inverco said that total assets under management for the Spanish occupational pensions sector stood at €37bn, an increase of 2.1% on the previous quarter.

The number of participants in the occupational system remained the same, at just under two million.

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