Equity exposure is rising among pension funds as returns boomed in 2009, according to BNY Mellon Asset Servicing.
The average UK pension fund achieved a weighted average return of 14.4% for the year ending December 31, last year, its figures reveal.
The performance measurement firm says this is the best return it had recorded since 2005 - and was a real return of 12.0% when measured against the retail price index for 2009 and 12.9% when measured against the national average earnings index.
It says results were also positive over the three-year period to December 31, last year - with an average return of 1.7% per annum.
Despite this, BNY Mellon said results were much more varied over the longer term - with funds achieving a weighted average return of 6.3% per annum over five years but a return of only 3.2% per annum over 10 years.
BNY Mellon Asset Servicing performance and risk analytics manager Alan Wilcock says: "Improvements in global markets in 2009 resulted in the majority of UK pension funds posting double-digit investment returns for the year.
"This is the best return BNY Mellon Asset Servicing has recorded since 2005 and marks a long coveted return in fortunes for UK pension funds which suffered the worst annual returns for 30 years just one year earlier."
BNY Mellon revealed average equity holdings had risen from 48.8% to 52.1%.
The main beneficiary in this rise was overseas equity holdings, which rose from 24.8% in 2008 to 27.5% in 2009. UK equity holdings rose by 0.6% from 24.0% to 24.6% during the same period.
UK bonds holdings fell over the year from 30.0% to 26.5%. Within this sector UK gilts fell the most with a reduction of 4.6%. Overseas bonds, however, increased slightly over the year by 0.2% to 1.7%. Cash holdings rose by 0.4% over the year while property holdings fell by 0.4%.
Over the decade to the end of last year, equity holdings have fallen from 73.3% to 52.1%. Asset allocation in UK equities has fallen by over a half during this period from 53.0% to 24.6%. Conversely, overseas equities has risen from 20.3% to 27.5%.
Meanwhile holdings in UK Bonds have more then doubled in the last 10 years from 11.3% to 26.5%. Overseas Bonds asset allocation has fallen from 4.6% to 1.7% while UK Index Linked holdings have risen from 3.7% to 11.2%.
Wilcock explained: "Some of the long-term trends in asset allocation for UK pension funds continued in 2009, with schemes reducing further their allocation of UK equity within total equity. Investment in corporate bonds increased to 18.7% of assets, while exposure to UK gilts fell to only 7.6%."
Three funds to watch
Adviser tech review