UK Funds Post Negative Results

March 19, 2002 ( - Assets in UK pension funds shrank for the second year in a row in 2001, posting their worst performance in over a decade, according to the Russell/Mellon CAPS pension fund survey.

According to the survey, which comprised 1,600 pension funds with combined assets of £352 billion, the median return for pension fund assets was -9.7% in 2001.

A report from IPE Newsline notes that the weighted average of pension fund returns came in slightly higher at -8.9%.

Despite the second consecutive negative result, real returns over a five-year time horizon were 3.2% per year relative to earnings, the report shows.

Despite the poor returns, 59% of managers managed to beat their own benchmarks by an average of 0.3% last year, and in the three years up to the close of 2001, two thirds beat theirs by 0.4% on average.

But pension funds are becoming stricter on their managers. The survey revealed that almost 25% of pension funds either changed investment manager or opened or closed a specific mandate, compared to only 10% of funds in 1990.