UK- Figures released by the WM company show UK funds fell 8.9% last year, the poorest performance in over a decade. The survey, which covers over 1,000 funds with combined assets of £423bn, shows only one fund produced positive returns in 2001. Nine out of ten were within a range of –5% to –14.3%.
Japanese equities fell 26.5% while the UK equivalent fared marginally better by registering a drop of 12.6%. Property rose 7.6%, ahead of overseas bonds on 4.9% and UK bonds on 4.2%. Index-linked gilts produced returns of –0.7%.
At the beginning of 2001, the average fund in the WM universe invested 71% in equities- 48% in UK and 23% in overseas. As the year progressed, so funds disinvested heavily from UK equities, withdrawing over £3.5bn and taking the overall proportion to 46%, a level last recorded in the mid-1980s.
Over the past ten years, exposure to UK equities has dropped almost 12 percentage points to its current level of 46%. Monetary assets and index-linked assets now account for almost 20% of the average fund’s assets. This is more that double the level a decade ago.
WM’s figures also show a considerable rise in allocations to overseas equities with an additional £12bn committed during 2001. Even after falling markets are taken into consideration, the allocation of 25% is the highest level recorded in the WM universe. American and Japan were the two greatest beneficiaries of this influx of cash.