EDINBURGH, Scotland - U.K. pension funds returned an average 5.6% in the second quarter, their strongest quarterly performance for nearly two years, according to The WM Co., Edinburgh.
Overseas equities, worth 23.3% of the average asset mix, provided an 11% return in the quarter. Japanese stocks led all categories, with a 22.5% return, while North American stocks returned 13.9%.
U.K. equities, comprising 52.4% of assets, returned 4.6%, underperforming the Financial Times Stock Exchange All-Share Index return of 5.2%. Underweighting in banking and pharmaceutical sectors, particularly in stocks such as HSBC and SmithKline Beecham, dragged down performance.
Still, strong U.K. equity returns have enabled money managers to realize investments without greatly lowering U.K. equity allocations. Sell-offs of U.K. stocks during the past eight quarters has amounted to more than 10% of U.K. equity holdings, said John Williams, director.
"Overall, pension funds have been able to take more than 20 billion pounds ($32 billion) out of U.K. equities over the last two years with little impact on the proportion of their assets held there," Mr. Williams said in a release. For larger pension funds, U.K. equities has shrunk to 51% from 53% of total assets, while smaller funds have seen U.K. equities shrink to 54% from 57%.
Emerging markets firms
STAMFORD, Conn. - The median manager in the Global Emerging Equity Markets Universe of InterSec Research outpaced a much-watched index by more than three percentage points in the second quarter. InterSec's median manager had an 11% return while the Morgan Stanley Capital International Emerging Markets Free Index was up 7.9%.
Overall, managers added value principally through their market allocations - underweighting South Africa and Malaysia and overweighting Brazil and Hungary. Managers' substantial underweighting of Taiwan's market was the largest negative influence on their performances. Stock selection proved overall slightly negative to performance, InterSec found.
For the same quarter, the median manager in InterSec's non-U.S. equity universe underperformed the EAFE index by almost a full percentage point.
While the Morgan Stanley Capital International Europe Australasia Far East Index rose 13%, in U.S. dollar terms, the median manager produced a 12.1% return, according to InterSec.
CBOT reaches deal
CHICAGO - The Chicago Board of Trade and the Izmir Commodity Exchange in Turkey are signing a memorandum of understanding to develop a derivatives market and clearinghouse in Turkey. The initial product to be offered will be contracts on cotton futures. CBOT will provide technical assistance and advisory services to the ICE. Eventually, the CBOT will gain trading rights in the new market.
Canadian pension funds
TORONTO - The median Canadian pension fund had a return of 22.9% for the year ended June 30, up from 13% for the previous year, according to SEI Financial Services.
For the most recent one-year period, the median Canadian active equity manager returned 32.5%, significantly outperforming the TSE 300 index's return of 30.1%.
The median Canadian active bond manager returned 14.2% for the period, slightly underperforming the Scotia Capital Markets Universe Bond Index's return of 14.3%.
In the quarter ended June 30, the median Canadian equity manager slightly underperformed, returning 10.2% compared with the TSE 300's 10.5%.; the Canadian median bond manager returned 3.7%, compared with 3.8% for the Scotia index.
Chase gains share
as Australian custodian
NEW YORK - Chase Global Investor Services for the first time captured the top market share position among custodians of assets of Australian superannuation funds, according to second quarter survey data from InTech Asset Consulting, Chase Global announced.
Chase's share of the market was 30.9% in the quarter. The IAC survey, dated June 30, placed State Street Bank in second position among superannuation funds, with a 27.4% share, and National Australia Bank in third, with 23.3%.
In overall master custody in Australia, the latest IAC survey shows Chase ranks third, with a 20.3% market share, while State Street continues to lead with a 38.8% share. National Australia Bank ranks second, with a 21.4% share.
outsource less than 5%
EDINBURGH - U.K. life insurance companies outsource less than 5% of their 770 billion pounds ($1.23 trillion) in assets, and show little sign of change, a survey conducted for Templeton Investment Management Ltd. found.
The survey of 19 CIOs of British life insurers, flies in the face of conventional wisdom that insurers will externalize money management, said Douglas Adams, business planning director, Europe.
In comparison, U.S. insurers have outsourced 17.4% of $2.3 trillion in assets.