PORTUGAL – Pension funds in Portugal were net buyers of equities in the first quarter, according to new data from Watson Wyatt.

The firm found that funds’ holdings of equities was fairly stable, at 20.9% compared to 21.5% at the end of December 2002. Given the market declines over the period, this shows that funds were net buyers of the asset class, says Watson Wyatt analyst Carlos Ravara.

Watson also found that funds raised their allocation to fixed income to 39.2% as of March 31, up 5.2 percentage points over the 34% allocation seen at the end of 2002.

The change was offset by a lowering of the funds’ allocation to floating rate assets including cash, which was down to 27.8% from 33% earlier. Property accounted for 11% and hedge funds had a 1.1% share of asset allocation.

Watson Wyatt found that the funds’ median return in the first quarter was 0.5%. In the last quarter of 2002, they returned 2.1% - although 2002 as a whole saw a 3.3% decline.

The firm surveyed 183 funds, including segregated funds, pooled funds and third pillar personal savings plans, or PPR/E’s, managed by 15 managers. The firm said the combined asset value of the funds is 12.4 billion euros, or around 80% of the total market value of Portuguese pension funds.