Equity slide hits trustees

27 July, 2010

European equity funds were the worst performing asset class for UK pension fund trustees in the second quarter of the year.

Data from BNY Mellon Asset Servicing shows that in three months of April, May and June this year, a pension fund would have lost 14.1% on average in pooled European equities (excluding the UK.) The best sector over this period was long dated UK bonds which delivered 4.5% on average.

The information comes from the firm’s Pension Fund Database, which covers the largest sample of pooled funds available to UK pension funds’ trustees.

Alan Wilcock, performance and risk Analytics Manager at BNY Mellon Asset Servicing, said: “Continuing fears over economic recovery, budget deficits, bank debts and the oil crisis in the Gulf of Mexico, all weighed heavily on equity markets during the second quarter driving prices lower, removing some, but by no means all of the gains made over the last twelve months.”

All stock markets were negative over the quarter but smaller companies in the UK were least badly hit, losing only 3.7% on average. Bonds and property were the best asset classes, with the latter returning 2.8%.

The period proved good news for UK active managers, with BNY Mellon’s sample of UK managers outperforming the FTSE All Share index by 0.7%. But over the 12 months to 30 June 2010, UK equity managers achieved 20.0% underperforming the index which returned 21.1%.

Read the full results here Performance Table