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Special Report

Impact investing

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Returns below zero for only fifth time since 1970

UK – Pension funds recorded only their fifth year of negative performance in 30 years in 2000, producing median returns of –1.4%, according to figures from performance measurement group CAPS.

Despite the downturn, however, real returns over the five-year period ending December 31, 2000, continue to be positive at 7.1% per annum relative to earnings and 9.1% per annum relative to retail prices.

And although returns were negative last year, UK active pension fund managers did not entirely disgrace themselves, according to the analysis.
The CAPS survey noted that there was a significant difference between the outcomes of value and growth strategies, with high yielding equities (value) returning 10.5% over the year and low yielding (growth ) equities returning –19.5% - reversing the pattern of the previous two years.

Within equity markets there were violent swings in fortune between industry sectors, with 1999’s star performers telecoms and technology stocks plunging into minus figures returning -37.7% and –44.1% respectively.
The best performing sectors were tobacco (56.9%) and personal care and household products (55.3%).

Property was the best performing asset class last year, while both European and UK bonds also gave high returns.
Europe was the only equity market to achieve positive returns for pension funds last year, with a median of 4.7%, compared to an index return of 1.5%.

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