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IPE special report May 2018

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UK schemes return 18% in 2005 – Mellon

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UK – Pension funds in the UK returned an estimated 18.2% in 2005, according to Mellon Analytical Solutions.

MAS, formerly known as CAPS, said the result “represents a third consecutive year of double-digit positive performance, following on from the three-year bear run at the start of the decade”.

It said: “Over three years, pension funds achieved an estimated weighted average of 14.8% p.a.”

Mellon said that over the last 10 years, pension schemes have returned an estimated 7.7% p.a. compared with 2.6% p.a. for retail price inflation.

“The strong performance in 2005 was driven by double-digit returns in each of the major equity markets,” Mellon added in a statement.

UK equities – still UK funds’ single biggest asset class – returned 22.0% in 2005. Emerging markets equities returned 49.9%, with Japan and Pacific ex-Japan performing well at 39.6% and 28.6% respectively.

Real estate returned an estimated 17.0% while index-linked gilts came in at 9.0%.

Corporate bonds, UK gilts and cash returned 8.7%, 7.9% and 4.6% respectively.

“By the end of 2004, pension funds had got back to where they were at the start of the decade, in terms of fund value,” said MAS statistics manager Daniel Hal. “This year they have finally started to move ahead.”

A full analysis will be available in March.

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