PORTUGAL – Pension fund returns for 2000 just scraped into positive territory - recording an average of 1.1% for the year - according to the preliminary results of the SEMP2000 survey by the Lisbon office of consultancy Watson Wyatt.
The results come despite negative returns for the last quarter of 2000, where data suggests a median performance for all segregated funds managed on a balanced basis at –1.9%.
The Watson Wyatt research covers approximately 96% (179) of the country’s pension funds and includes segregated funds (both restricted and unrestricted), pooled funds and third pillar personal savings plans (PPR/E).
The combined asset value of the funds is PTE2.54trn (e12.7bn).
Segregated pension funds without restrictions, which make up the majority of the funds, did not alter their asset exposure greatly in the last quarter.
There was a slight decline in euro public debt fixed rate investment, down from 25.3% to 22.8% of total assets. Similarly, investment in international equities fell from 7.3% to 5.8% of total assets.
Cash and money market investment gained in popularity in the fourth quarter, rising from 9.4% to 12.4%.
According to the research, investment in Portuguese equities, which made up 15.4% of the funds’ total assets at the end of 1999, seems to have levelled at around 11% since mid-year 2000. Meanwhile, investment in other euro equity markets rose from 10.5% to around 13% in the first quarter of last year, staying at that level since.
Portuguese equities performed badly in 2000, with the BVL-30 index at –11.1%, but pension funds fared somewhat better, with returns of –5.8% in domestic equities, the study says.
International equities ex euroland proved trickier for fund managers, with returns at –11.6%, compared to –8.4% for the MSCI World ex EMU index.
Directly held property and property investment funds performed well, however, with returns at 8.4% and 7.4% respectively. Together, the property sectors, made up 7.2% of the funds’ total assets in the fourth quarter, compared to 5.8% in the third quarter.
Segregated funds comprise 95.4% (152 funds) of the total assets in the survey, of which 108 (61.6% of total) have no restrictions imposed on them by the sponsors. Pooled funds comprise 1.2% (13 funds) of the total assets and the 14 personal PPR/E funds make up 3.4% of the total monies. The PPR/E pension funds have different legal restrictions on their investment policy, but their median return was slightly less negative, at –0.4%.