mast image

Impact Investing

IPE special report May 2018


UK returns worst since 1974

UK pension funds reported negative investment returns of –13.9% in 2002 – the worst annual return since 1974, according to research conducted by performance specialist WM Company, now part of the State Street group.
Weak equity markets have been the driver of negative investment returns, says the research, with UK equity return of a typical fund last year being –22.5%, and international equity portfolios returning –24%. Japanese and pacific ex-Japan equities performed better than North America and continental Europe equities.
Bonds and property produced positive returns. Both UK government bonds and UK corporate bonds returned about 9.6%, with overseas bonds just behind at 9.3%. Index-lined bonds returned 8.7%. Property returned 9.1% over the year. The three-year annualised property return is almost 9% per annum, and at 11% per annum over the last ten years makes it the leading asset class.
Despite the negative returns resulting from equities, UK pension funds seem to be prepared to accept the inherent volatility in order to “secure additional long term return,” says the research.
In 2002, there was net positive investment by funds into equities, particularly into international equities, and predominantly US equities, with the aggregate equity purchases coming mainly from existing liquidity and sales of bonds – especially overseas bonds. Equity exposure for typical UK pension funds at the end of 2002 was 65%.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2435

    Asset class: CLOs.
    Asset region: Global.
    Size: USD 50m.
    Closing date: 2018-05-22.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

Begin Your Search Here