UK – State Street’s performance measurement division WM Co. says there is a “chink of light” for UK pension funds, with returns reaching almost 10% in the second quarter.

WM said that the average fund posted a return of 9.9% for the quarter and 6.4% for the year to date.

“While we need to be wary of a false dawn, this is a first chink of light in the gloom, which has enveloped pension fund returns since late 1999,” said WM consultant Graham Wood.

“Although we have seen occasional periods of positive returns since, this is the first time that returns for the first six months of the year have remained in positive territory.” He said it remains to be seen whether the gains will persist to the end of the year.

European equities made the highest returns, 19.3%, followed by UK equities at 14.8% and US stocks at 10.4%. Japan was up 6.5% and other Pacific areas gained 12.2%.

WM said that asset allocation shifted slightly, by two percent, towards equities with the reduction coming from monetary assets and property.

“This shift is attributable in the main to relative market movements. Cash flows do not make a material difference.”

WM says the quarterly survey is based on a representative sample of the full annual survey, which covers more than two-thirds of the UK pension fund market.