UK - Japanese equities delivered a negative return for UK pension funds in 2007 schemes returned an average of 6.8% by the end of the year thanks to strong performances in emerging market stocks and index-linked gilts.

Preliminary year-end figures compiled by Bank of New York Mellon's asset servicing division reveal Pacific ex-Japan equities did well and generated returns of 34.2% over the 12 months but Japanese stocks, in contrast, produced a negative return of -6.5%.

Property was the only other sector to have a negative return of -2.6% but elsewhere good gains of 28% on Canadian stocks, 15.3% for Europe ex-UK equity and 5.3% delivered positive results.

In contrast to property, cash and UK bonds both generated 5.6% and 5.3% respectively but these were both superseded but positive activity for index-linked gilts as the fixed-income sector returned 8.5%.

BoNYM's pension fund performance figures are based on its clients' pension fund investment performance, regardless of any investment restrictions on the mandates, and are estimated by combining the weighted averages of funds to September 30 2007 with an estimated weighted average for the fourth quarter.

This should mean pension funds have generated an estimated weighted average return of 6.7% per annum in the 10 years to December 31 2007, generating a real return against the retail price index (RPI) of 3.9% pa.

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