7/1/2010
By Sophie Baker
The average defined benefit (DB) pension fund trustee board enjoyed returns of around 15 per cent, according to initial estimates for the WM UK Defined Benefit (DB) Pension Fund Universe by State Street Investment Analytics.
The preliminary results of its UK Pension Fund and Charity Fund Universes for 2009 show that safe havens, such as cash and government bonds, suffered, in comparison to more risky assets. Jeanette Patrizio, vice president of State Street Investment Analytics, explained: “In isolation, it was a stellar year for risk assets, both equity and corporate bonds, while the safe havens of cash and government bonds languished. However, the returns in the latest year represent only partial recovery of the significant investment losses that were rooted in the collapse of the credit market and the sharp economic recession it precipitated.”
UK equities gave a year performance of 30 per cent, with international equities having mixed results for the UK investor – the Pacific region ex. Japan and emerging markets gained 50 per cent and 55 per cent over 200, North America 17 per cent, Europe 19 per cent, but Japan returned -6 per cent. Currency featured majorly in international returns, with Sterling strengthening by around nine per cent against the euro, 12 per cent against the US dollar and 15 per cent against the Japanese yen.
Government bonds showed modest declines, with UK Government bonds falling by one per cent over the year, and corporate bonds returning a positive 11 per cent. For alternative strategies, hedge funds led the way with a ten per cent return overall, although property values continued to decline with -2 per cent for the year.
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