UK surprises with 14% return in 1998
UK pension funds recorded upbeat average returns of over 14% on investments during 1998, ac-cording to estimates from the WM Company, covering more than 1,600 funds with assets of £450bn (E640bn).
Returns were equivalent to a real return (after price inflation) of 11%, comparing favourably to average real return of 9% over the last 20 years.
WM executive Peter Warrington, said: At the start of the year few people were predicting 1998 returns would be so high. In the figure breakdown equity investments continued to surprise with their strength, averaging returns of 13%, despite many managers positioning for market corrections.
And WM now estimates that UK equity holdings have fallen to around 50% - their lowest in 10 years.
Best results for funds came in European equities, where returns averaged 32%, and in North American equities with returns at 25%.
Japanese and Pacific (ex-Japan) funds proferred predicatbly muted returns for the year though coming out at 8% and -4% respectively.
UK bonds returned figures of 20% in 1998, due largely from long dated stocks the WM data shows, well ahead of bond returns of 13% over the last 10 years.
And the Ir£30bn pension fund market is expected to produce return figures for the year of around 19%, following the publication of results by William M Mercer for Irish pooled funds in 1998, which came out at 19.1% and are traditionally slightly higher than their segregated counterparts.
Deborah Reidy, investment consultant at Mercer in Dublin, said: "Everyone has been pleasantly surprised with the results here, particularly those with strong domestic, European and US equity investment. Most analysts predicted the end of the bull run at the start of the year and by its finish were looking at returns of double their annual estimates."
WM estimates for the Dutch segregated market annual returns are also healthy, according to Kaes Westland, manager of the company's Netherland's office.
"The figures will not be finalised until April but we are looking at a range of 12-20% because of the varied Dutch fund investment scene, and an average of around 14% - which is a double-digit return again for the year."
In Portugal, early estimates from WiliamMercer also show returns well ahead of inflation at around 11.8%, according to consultant John Grant, with final figures to be released soon.