Managers of Hong Kong pension funds generally out-performed the Hang Seng Index during the second quarter, a survey by William M. Mercer, the benefits consultants, reveals. Variable performance across markets and asset classes produced returns within a narrow band with Global Asset Management (GAM) producing the top return of about 4.4 per cent. The average return was 1.7 per cent compared to 0.6 per cent for the Hang Seng Index. GAM, with about $16 million under management in the fund, is the survey's worst performer over three and five years. The quarter's worst performer - Thornton Management, which lost 0.4 per cent - is an in-house pension scheme for staff members investing exclusively in Asian stocks. CEF Investment's fund, which broke even for the quarter, is another fund targeting regional markets. Both funds' performances are also among the most volatile of those surveyed. The survey is based on a retirement plan that each manager has a full discretionary mandate for and which typifies the manager's approach for retirement plans. Pension plans are long-term investments and quarterly results are only useful as an indication of short-term trends. The three and five-year performance results are a better guide to the quality of the fund management. Over five years, the top performer is Credit Lyonnais, with a 25 per cent return on a $25 million fund. This compares to an average return of 16 per cent. It is the third top performer over three years. Laurels for three years go to a $325 million fund managed by Kleinwort Benson, which has produced 24 per cent compared to an industry average of about 15 per cent. Mercer M. Williams said the international investment environment in the second quarter was variable. 'Southeast Asian markets were quite weak over the quarter mainly as a result of tightening liquidity in an attempt to control potentially overheating economies,' a spokesman said. Fund managers had varying views about growth in the US economy, with many predicting interest rate rises. Lower inflation and the outlook for a growing Chinese economy had many fund managers taking positive views about continued growth in Hong Kong and the region.