Results for UK pension funds and charities in 2013 showed a second consecutive year of strong performance, with headline returns of 11% for pension funds and 15% for charity funds.
The results come from State Street’s annual UK Pension and Charity Fund survey. It found that over the last five years, pension funds have returns around 10% a year, ahead of most actuarial growth assumptions. Equity markets surged ahead until tapering talk last May lead to a correction, but performance then picked up in the third and fourth quarters.
UK equities gained 22% according to State Street, with small- and mid-caps leading the way. International equities also did well, particularly Japanese and North American equities. However, emerging markets lagged developed markets and returned only 1%. Within fixed income, corporate bonds did better than highly-rated government bonds, but in aggregate, bond returns were close to zero. Returns from real estate and alternatives were generally positive, being ahead of cash and bonds but lagging equities.
Looking at asset allocation, State Street said that the average fund’s asset mix remained largely unchanged. Within equities, there was a move away from regional allocations to broader, bottom-up global allocations and exposure to alternative assets remained around 10% but with more interest in infrastructure and diversified growth.