U.K. pension funds’ investments returned 15% in 2009 while charity funds returned 19%, according to an analysis by State Street Investment Analytics.
U.K. equities for pension and charity funds returned 30% for the year ended Dec. 31, while international ex-U.K. equity returns were mixed and were affected by a rising pound sterling relative to other currencies.
“Returns for U.K. investors were lower than for investors in local currency markets,” said David Cullinan, vice president at State Street Investment Analytics. Continental European, North American and Japanese stocks returned 19%, 17% and -6%, respectively, as the pound strengthened 9% vs. the euro, 12% vs. the U.S. dollar and 15% vs. the yen. Emerging markets stocks rose 55%.
Corporate bonds returned 11%, while U.K. government bonds declined 1%. Hedge funds increased 10%.
Pension and charity funds generally increased their allocations to hedge funds and private equity in 2009, while reducing their bond and stock allocations, according to State Street Investment Analytics.
State Street’s analysis was based on data from the WM UK Defined Benefit Pension Fund and the WM UK Charity Fund universes. The pension fund universe comprises 230 funds with about £450 billion ($720 billion), while the charity fund universe has 270 funds representing about £9 billion. The data come from State Street Corp. custody clients and survey responses.