WHILE companies may find it easy to blame pension fund managers for their less-than-spectacular performance during 1994, spare a thought for the plight of the managers. Hong Kong's inflation rate is running at 10 per cent, while salary inflation is galloping ahead at between 10 and 15 per cent. Basically, managers have to generate at least 10 per cent returns just to stand still. Elsewhere around the world - the United States or Britain - this is easily done. Fixed-interest instruments generally yield something close to the inflation rate, so pension funds can use bonds and equities to add a bit of pip to the portfolio. This does not work in Hong Kong. If managers want to get anywhere near inflation, they have to be heavily weighted in equities. That is fine, as long as companies realise that the downside of such a stance is it increases the volatility of the funds under management. Of course, managers could leave the markets alone, stick with fixed interest and reduce volatility. That would please the client - but not for long. In a year like 1993, it is difficult to imagine any client being happy with a safe 10 per cent return when the markets went up 100 per cent.