Portugal’s pensions industry continued its rapid expansion last year, recording growth of 14%, ac-cording to the 1998 Watson Wyatt survey.
The survey of 190 separate funds managed by 19 investment managers, covers 98% of the market with assets of E11.3bn.
Pooled funds showed the highest year end growth, rising 43%; a significant indicator of their increasing importance for small and medium sized companies. However, real re-turns in 1998 were lower than those in 1997, principally due to the erratic performance of global and domestic equity markets, the survey says.
The median return achieved on segregated funds was 11.9%, and since the 1998 inflation figure for Portugal was 3.2%, jumping from 1997’s 2.3% due to costs associated with Expo ‘98, this implied a real return of 8.7% last year. On the other hand, the median pooled fund attained a real return of 9.9%.
Euro convergence, however, continued to lower interest rates in the country leading to good performance from fixed-rate bonds which attained a median return of 11.6%. Floating rate bonds only managed 5.9%.
Domestic equity returns shone at 30.5%, whilst international equities produced 13.9% and foreign bonds 5.3%. Property investments had a median return of 6.8% Asset allocation shifts show international exposure doubling from 7.5% to 15.1%, although domestic bonds continue to dominate portfolios with an average exposure of 52%.