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Impact Investing

IPE special report May 2018


UK pooled balance funds stay positive for second quarter running

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UK pooled balanced funds have made positive returns for the second consecutive quarter, according to Russell/Mellon CAPS.

The Russell/Mellon CAPS pooled pension fund database, which covers the largest sample available to UK pension funds’ trustees, showed that pooled balanced funds had a median return of 3.9%.

Daniel Hall, Russell/Mellon CAPS statistics manager, said: “This brings the median performance of pooled balanced funds to 14.6% for the last 12 months – a leap back into positive territory. The last time these funds achieved a positive one-year return was in the 12 months to 31 January 2001.”

The strong performance of equities was the main driving force behind the positive overall return, he said. The index return on UK equities was 3.9%, while overseas equities returned 4.7%.

Japanese equities produced the best performance of 21.2%. However, US equities returned only 1.7% in sterling terms, reflecting the impact of the fall of the dollar against the pound.

Property (1.8%), overseas bonds (1.3%), and cash (0.8%) also made slight gains, while UK bonds (-0.7%) and index-linked (-0.5%) provided the only negative market performances.

Within the UK equity market, small cap stocks produced the best return of 12.6% for the quarter. Mid cap stocks also performed strongly, returning 10.8%, while large caps returned only 2.6%.

Information technology was the best performing of the UK equity sectors over the quarter and over the past 12 months, returning 23.8% and 67.9% respectively. Utilities was the only sector to provide a negative return (-2.5%), over the quarter. Value stocks outperformed growth stock, returning 4.1% against 3.1%.

Average overseas equity weighting within balanced pooled funds reached 27.8% - the highest level since CAPS records began in 1989.

The Russell/Mellon CAPS pooled balanced funds database covers 83 asset managers who manage £236bn (€338bn) in pooled funds, both balanced and specialist.

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