UK – Balanced pooled pensions funds have now recovered to around 98% of their asset value at the end of 1999, thanks to continued strong performance in the second quarter.
The median return for these funds in the second quarter of 2005 came to 4.7%, making it their ninth successive quarter of positive median returns, figures from the Russell Mellon Pooled Pension Fund database show. These funds are used extensively by smaller and medium-sized pensions funds in the UK.
This is the longest sustained run of positive balanced funds since the mid-1990s, said Daniel Hall of Russell Mellon in London. “Based on net median performance, a typical balanced pooled fund would now be worth around 98% of its asset value at the end of 1999.” This compares with the position 12 months ago, when the ratio was around 85%.
In the second quarter of this year, positive returns were achieved across all major asset classes in specialist pooled funds, with UK equities achieving index returns of 5%, overseas equities returning 6.7%, UK bonds, 4.7%, overseas bonds 4.2%, index-linked gilts 4.1% and property 4.5%.
Russell Mellon pointed out that active managers under performed in all sectors of pooled fund vehicles, except in the case of Japanese equity and index-linked sectors and they matched the index in cash sector. Active UK equity managers’ median return was 4.5% after fees compared with the FTSE All-Share index return of 5%.
Balanced pooled managers moved money out of UK equities, with average weightings falling in the quarter to 50.6% from 51.2%, while overseas equities rose to 33.2% from 32.3%, as a result of manager movement and strong relative performance. Bond weightings fellto 6.7% from 7.2% for UK and to 2.4% from 2.6% for overseas.
The database covers 77 separate asset managers, who manage £336bn (€484bn) in pooled funds, both balanced and specialist.