HONG KONG'S pension fund managers have been battered by a calamitous 1994 on Asian equity markets. Statistics compiled by actuarial consultant William M. Mercer, shown to Sunday Money, paint a picture of across-the-board losses, with none of the 24 managers surveyed generating a positive return. Industry sources said hard-hit blue-chip corporations were consulting fund trustees to review fund managers' performance, and might replace those who had failed to perform. Andrew Vrech, a senior consultant at Mercer, said: 'The results are not a great [Lunar] New Year present for Hong Kong pension schemes.' The worst performer was blue-chip manager Jardine Fleming with a 17.7 per cent loss. Baring International finished second-last, having lost 16.9 per cent, and BNP International Financial Services was ranked 22nd of 24, with a 16.2 per cent loss. On average, fund managers lost 11.3 per cent, the Mercer figures show. The top performer was Kleinwort Benson, which lost only 0.2 per cent over the year, followed by Swiss Bank Corporation, with a 3.3 per cent loss and then Prudential, which lost 4.6 per cent. Mr Vrech said when Hong Kong's 10 per cent inflation rate was factored in, schemes such as Jardine Fleming's had lost almost 30 per cent in one year. This has raised the spectre of companies having to pay out hundreds of millions of dollars to top up pension schemes which failed to match salary inflation. 'Many companies may need to review the solvency of their schemes and some trustees may be forced to declare negative returns on their defined contribution arrangements as a result of poor performance in 1994,' Mr Vrech said. The money used to top up pension schemes would otherwise be allocated to the companies' shareholders. Chris Vale, director of Kleinwort Benson, said the time had come for trustees to pay more attention to fund managers' performance. 'The industry here is dominated by three managers, while other managers are getting very good numbers. I think trustees ought to be awarding mandates to managers other than the big three,' he said. Chris Ruffle, head of pension fund investment at Jardine Fleming, defended his performance. 'In 1993, the average pension fund generated returns of 53 per cent, while we managed 67 per cent, well ahead of the average. This year we are a few per cent below the average, but we certainly have not given back as much as we have gained.' He described Jardine Fleming's investment strategy as 'at the high end of the volatility spectrum', and argued the house performed better in bull markets than bear markets. Richard Haw, managing director of Schroders Asia, said volatility was inevitable in Hong Kong's high-inflationary environment. 'It is impossible to match inflation by buying fixed-interest instruments in Hong Kong, so you have to overweight equities to boost performance. 'Of course, you could load up on bonds and reduce volatility, but if you had done that in 1993 you would have been fired.' Mr Vrech disagreed: 'We think pension managers need to look closely at their investment strategies. 'Clients are starting to say they neither want, nor need, such volatility. There is a need to educate trustees and encourage them to put more pressure on managers.'