russell/mellon caps survey underlines poor performance by equities over recent years
Bonds and property have emerged as the most consistent performers over the medium and long term, according to the latest Russell/Mellon Caps Pooled Pension Funds survey.
Over the 12 months to 31 March fixed interest dominated the handful of sectors with positive returns, accounting for the three best sector performances.
UK Bonds ' Long Term returned 12.3%, International Bonds managed 11.9% and UK Bonds ' Standard returned 10.6% over the period, offer to offer with net income reinvested.
Over three years, the International Bonds peer group was the second best performer with annualised returns of 8% while Property gave the best performance with a 9%pa return.
The poorest performers over the 12 months to 31 March were European ex-UK Equity with returns of -33.8%, North American Equity with -32.8% and pan European Equity funds at -31.6%.
European ex-UK equity was also one of the worst performers over three years ' its annualised return of -19.1% was matched by Overseas Equity and was undershot only by Japanese Equity on -25.9%pa.
Pan-European equity funds again fared poorly with a -18.3%pa return.
Over 10 years to 31 March, property was the top performer with a 10.8% annualised return while over the same period UK Bonds ' Standard came in second with 8.8%.
Throughout the first quarter of 2003 International Bonds was the top performer, returning 5% over the three-month period, while the Index-Linked sector was second with 3.1% and property managed 1.7%.
The worst performing sectors over the first quarter were UK Smaller Companies with -7.6%, followed by European ex-UK Equity with -7.3%, while pan-European Equity and UK Equity-Standard both returned -6.6%.
Pooled UK Smaller Companies managers were more successful, beating the FTSE Small Cap index over the quarter and over one, three, five and 10 years to 31 March. The median return for the first quarter of 2003 was -7.6%, compared to the index return of -9%,
Alan Wilcock, research and development director at Russell/Mellon Caps, said: 'Managers underperformed in the overseas section in the first quarter, largely due to their higher weightings in Europe and lower weightings in North America.
'However, active managers outperformed their respective indices in the North American, European ex UK, pan-European, Japanese and Emerging Market Equity sectors.'
Returns were uniformly negative among UK Equity-Standard sector funds over the first quarter of 2003, with even the best performer, Old Mutual Fairbarn, managing a 2% fall in value. DC Active UK Equity was the second best in the period, with -2.6%, while Abbey Life returned -2.9%.
Wilcock said active UK Equity-Standard managers generally beat the FTSE All Share index over the quarter, returning -6.6% compared to the index which managed -7.2%. He added: 'A majority of managers in this sector have beaten the index over one, three and five years to 31 March.'
The poorest returns in the sector came from GAM UK Diversified with -14.1%, MMIP UK Equity with -11.4% and Morley PP Specialist with -9.5%. However GAM UK Diversified was the best performer over three years to 31 March, returning 0.6% annualised over the period ' the only sector fund to manage a real gain over that timeframe.
Next in line were Standard Life UK Select with -6.8%pa, followed by Lazard UK Income with -7.2%pa.
The worst performers in the sector over three years to 31 March were Glasgow Investment Managers with a return of -21.6%pa, Isis UK Equity with -19.3%pa and Jupiter UK Growth with -19.2%pa.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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