UK pension funds have been let down by poor results on equity investments for 1998, according to figures released by UK performance measurers CAPS - with over 60% of fund managers unable to beat their benchmarks .
The figures, covering almost 1,700 UK pension funds with assets of £354bn, show discretionary funds underperforming by an average of 2.2% against the FTSE All Share, with the best performer returning 24.9% and the worst just 8.2%.
The returns were particularly low for UK equities, with the median return showing 10.4%, against the index at 13.8%. Best performing sectors were both European and US equities, with returns of 29.1% and 27.6% respectively. Emerging Markets was the worst performer coming out at -25.3%, with Pacific ex-Japan returning -8.0% on average.
Significantly, the report shows UK equity weightings are at their lowest level (52.1%) since the survey commenced in 1984. Conversely, bonds are now at their highest level, averaging 17% per portfolio.
Furthermore, the CAPS report found that funds managed by the schemes themselves outperformed discretionary briefs by over 10 basis points, due to their typically conservative high bond holdings, particularly in the UK, and their tendency for constant full investment.