PORTUGAL – Portuguese pension funds returned 1.4% for the third quarter, according to research from Watson Wyatt.

The latest estimates by the consultants state that Portuguese pension funds returned 1.4% in the third quarter of 2003, taking the year-to-date returns to 5.4%.

Portuguese equities were the best performing asset class for the period end of June to end of September, returning 5.4%. Watson Wyatt attributes the performance to corporate activity’s renewed interest.

The asset class is also the best performer year-to-date, having produced an estimated return of 7.6%. International equities also performed well over the third quarter returning 3.7%, and 6.6% over the first nine months.

Euro public debt, which receives the largest allocation of Portuguese pension fund assets returned only 0.1% over the third quarter – less than cash/money markets which returned 0.5%.

Alternative investments which represent the smallest asset class of Portuguese pension funds, with just 1.6% of assets allocated to it, returned 1.5% over the third quarter, taking its year-to-date returns to 5.6%.

If the third quarter estimates are accurate, it will be the second consecutive quarter in which all assets classes have produced a positive return.