BNY Mellon Asset Servicing unveils latest CAPS Pooled Pension Fund results

LONDON, 25 July 2007 — Statistics published today by the performance measurement and analytics business unit within BNY Mellon Asset Servicing show that balanced pooled funds are continuing to achieve positive returns, and over Q2 2007 the median return was 3.7%. This is the fourth consecutive quarter that we have seen a positive return, and brings the 12 month return to 14.9%.

Balanced pooled funds achieved real rates of return over both the quarter and 12 months, as well as over longer term periods. Over five and 10 years, median returns were 10.4% p.a. and 6.7% p.a., against returns of 3.3% p.a. and 2.8% p.a. respectively for the Retail Price Index.

UK Equity managers achieved a return of 3.8% in Q2 2007, underperforming the FTSE All Share index by 0.7%. European ex UK (6.0%), Japanese (-3.5%) and Emerging Market Equity (12.3%) pooled fund managers also underperformed their respective indices during Q2 2007. However, the same cannot be said for Pacific ex Japan Equity pooled fund managers, who achieved an outperformance of 3.9% over the quarter, with a return of 12.3%.

International Bond (-3.6%) pooled fund managers also achieved an outperformance during Q2 2007, by contrast UK Bond managers (-2.4%) underperformed the index by 0.1%.

Positive index returns were achieved in almost all of the major equity markets during Q2 2007, the exception being Japanese Equities which returned -2.7%. The strongest performances came from Emerging Market and Pacific Basin ex Japan Equities which achieved returns of 12.4% and 8.4% respectively. UK Equities returned 4.5% over the quarter, underperforming European ex UK Equities (6.7%), but ahead of North America (4.2%).

The best performing non-equity sector of the quarter was Property, which achieved a return of 2.2%. Cash (1.3%) also provided a positive return. However UK and International Bonds, as well as Index Linked Gilts, struggled in comparison and all failed to produce a positive return.

At the end of Q2 2007, balanced pooled fund weightings in UK Equities had fallen to their lowest recorded level of 46.3%. This reduction of 0.7% was a result of managers moving money out of this sector. By comparison we saw a substantial increase of 1.6% in Overseas Equities, which boosted end of quarter weightings to 39.2%.

A combination of manager movements and strong relative performance contributed to a 0.7% increase in weightings for both European and Pacific ex Japan Equities. The end of quarter weighting of 15.3% for European Equities is the highest recorded level we have seen for this sector. The only Overseas Equity sector to see a reduction in holdings was Japanese Equities, which decreased by 0.3%. This was as a result of poor relative performance.

A combination of poor relative performance and manager movements meant that weightings also fell in UK Bonds, Overseas Bonds, and Cash over the quarter. Holdings in Property and Index Linked Gilts remained fairly static.

Commenting on the results, Daniel Hall, Publications and Statistics Manager at BNY Mellon Asset Servicing, said: "Over the quarter we have seen weightings in UK Equities reach a new low as managers continued to move money out of the sector. Conversely, some strong performances in the Overseas Equity markets, combined with manager movements meant that holdings in Overseas Equities reached a new high".

BNY Mellon Asset Servicing's Pooled Pension Fund Database covers the largest and most representative sample available to UK pension funds' trustees. The database currently covers 77 separate asset managers who manage over £439 billion in pooled funds, both balanced and specialist.

The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and move their financial assets, operating in 37 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services and treasury services through a worldwide client-focused team. It has more than $20 trillion in assets under custody and administration and more than $1 trillion in assets under management. Additional information is available at www.bnymellon.com.