UK – Last year’s poor performance by pension funds has continued in the first quarter of this year, with UK pooled mixed with property funds returning a median of –7.2%, the poorest start to a calendar year since 1974, according to figures from performance measurer CAPS.

The poor results make it the fifth quarter in a row to show negative average returns. Furthermore, over the year to March 31, 2001, the median mixed with property fund returned –10.3%, with only one of the surveyed funds, J Rothschild (GAM), achieving positive returns at 6.1%.
The fund had the second lowest exposure to UK stocks (29%), one of the highest levels of overseas equities exposure (34%), but perhaps more interestingly, 37% of its assets were invested in cash.

Even though the FTSE all-share index returned –8.4% for the three months, there was a large variation in the fortunes of different sectors, says CAPS.
UK resources stocks provided the best return at 6.3%, while information technology shares sunk by 37.7% to produce the lowest returns.

Generally speaking, the report notes, the funds that fared well last year continued to do so, and those that had a bad year in 2000 did not do any better in the first quarter of this year.

As a result of more than a year of market volatility, the predominantly positive returns of UK pension funds over the last three years have been eroded, says the report.
Currently, the median annual return on mixed with property funds is now just 3.3%. Over the longer term, the results are better - the median over a five-year period is 9.9% and the ten-year median is 11.1% per annum.

CAPS pooled pension fund database covers 88 separate asset managers, who manage over £194bn in both balanced and specialist pooled funds.