Active managers of U.K. pension fund assets failed to beat their benchmarks in most asset classes in 2006, but performance looked better on a rolling three-year basis, according to a report by Mellon Analytical Solutions.
The 2006 median return for active U.K. equity managers was 16.5%, compared with 16.8% for the FTSE All-Share index, according to the report, which analyzed 1,850 actively managed portfolios from 488 U.K. pension funds with a combined £207 billion ($405 billion) in assets. The median return for overseas equities was 5.9%, compared with 6.2% for the FTSE All-World ex-U.K. index; U.K. bonds returned a median 0.5%, compared with 0.7% for the FTSE Actuaries All Stocks Gilt index; and real estate returned a median 19.6% compared with 20% for the CAPS Property index. Active cash management, at 4.7%, and overseas bonds, at -7.0%, outperformed their benchmarks — the CAPS Cash index and the JPMorgan Global (ex-U.K.) Traded index — by 0.1 and 0.5 percentage points, respectively.
However, active U.K. equity managers beat their benchmarks in six out of the last 10 rolling three-year periods. In the three-year period ended Dec. 31, 56% of the active U.K. equity managers beat their benchmarks; 41% of active global equities managers outperformed their benchmarks; and 69% of the active fixed-income managers topped their, according to the report.
