Investment returns from U.K.-based pooled pension funds fell in 2001 for the second year running, with the median balanced fund posting a return of -11.9%, according to performance measurement group Russell Mellon CAPS. The median return for balanced funds was -3.8% in 2000.
The median return on U.K. equities was -13.1%, while returns from global fixed income and cash were 3% and 5.6%, respectively.
But despite weak equity returns, average equity weightings by balanced funds increased to 80.3% as of Dec. 31, from 79.6% a year earlier. Balanced funds allocations to U.S. equities increased sharply, to 27.4% of overseas equity allocations as of Dec. 31, from 21.1% at the end of 2000. Average allocations to European equities fell to 42.6% from 48.8% for the same period.
The average allocation to fixed income by balanced funds increased slightly to 13.6% as of Dec. 31, from 12.5% at the end of 2000, as fund managers cut their cash holdings, said Alan Wilcock, head of research and development for Russell Mellon CAPS.