Segal Advisors Survey Measures Pension Funds' Performance

The median return for the survey funds’ fixed-income investments was 2.7%, while the Lehman Aggregate Bond Index was 2.4 %.

The funds’ median overall investment performance was 5.7%, compared to the comparative benchmark of 3.9 %, which is composed of 55% S&P 500 Index and 45% Lehman Aggregate Bond Index.

According to the survey, Segal recorded total assets of more than $22 billion as of December 31, 2005.

Though the company reported that its results were overall favorable, it warned in the release that many multiemployer plans have not yet fully recognized the actuarial losses as a result of the much-discussed “Perfect Storm” of 2000-2002. Continuing recognition of these losses will serve to dampen the positive effect of returns over the next few years, according to a release on the survey.

The survey found that funds with the “best-performing” equity investments had a 12.2% rate of return and more than 80% of them were above the S&P 500 Index, which puts the index in the bottom quartile.

The funds in the 2005 survey experienced an eight percentage-point spread between the highest and lowest performing funds’ equity investments – 12.2 % in the 5th percentile and 4.2 % in the 95th percentile – which was smaller than the previous two years’ spreads. There was a two percentage-point spread from 4.3 % to 2.0 %.

However, there was a 2.7% median return on fixed income investments, which was lower than the median returns of 4.5 % in 2004 and 5.1 % in 2003, according to the survey.

The funds in the 2005 survey had a 5.7% median combined return on total investments, which was higher than the composite index.