Stock market volatility throughout the year saw UK pension funds posting negative returns, according...
Stock market volatility throughout the year saw UK pension funds posting negative returns, according to estimates from performance consultants the WM Company.
The estimates indicate a -1.8% return for 2000 against a 21.3% gain posted for 1999.
Peter Warrington, WM executive director said pension funds had managed a return of around 14% per annum but exceptionally high volatility had taken its toll on 1999 highs.
"With the collapse of technology and telecom markets we expected some of the star managers of 1999 to suffer badly but, by using top-slice, some managed to avoid the downside," he said. "However, active pension fund managers have coped well and managed to outperform the index."
Warrington added the UK equity return for the average pension fund exceeded the FTSE All-Share and was the largest outperformance by UK pension fund managers in the past 10 years.
Warrington said 2000 performance in the main sectors were almost a mirror image of 1999. IT companies lost close to half their value and telecom companies were down by a third. Consumers and utilities were up by 30% and 20% respectively.
Bonds and property both recorded strong gains. UK bonds returned more than 8%, with strong income streams their main strength, while overseas bonds returned over 12% after benefiting from the weakness of sterling.
Both bond sectors recovered from negative territory in 1999 while property slipped from the 14.1% returns to 10.2%.
Europe also showed positive returns of 5% while North American returns were flat. Japan and the Pacific declined by around 25% and 17% respectively.
WM's annual pension fund survey covers in excess of 1,600 funds with assets of over £500bn. Provisional figures for 2000 reflect actual fund activity in the first three quarters of 2000 plus overall market movements in the final quarter.
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