Investors in local retirement funds have been advised not to panic despite disappointing performances in the first half of the year. Local retirement funds posted returns of minus 4.6 per cent in the first half and minus 5.7 per cent in the April to June quarter, according to pension consultant Watson Wyatt Hong Kong.
The median return for the latest quarter works out to minus 22.8 per cent if calculated on an annualised basis. This figure is well below the positive 12.4 per cent return earned in the 12 months to June 30.
Most of the 300 funds surveyed were Occupational Retirement Scheme Ordinance (Orso) schemes, said Kelvin Ko, associate investment consultant at Watson Wyatt.
Most were segregated funds, the type run by large companies such as the Hong Kong Jockey Club, which has enough employees to warrant appointing its own trustee, administrator and fund manager. Smaller companies make use of the economies of scale offered by pooled retirement schemes.
Best of the bunch for the second quarter among those assessed was Principal Insurance (Hong Kong), which managed a barely positive 0.3 per cent return. Scudder Investment Asia came second, with a minus 1.4 per cent return, and Scottish Widows Investment Partnership came third, with minus 2.7 per cent.
'Of course, everyone would always like good performance,' Woodrow Milliman Asia chairman Stuart Leckie said. 'But if you look at retirement funds over the last five to 10 years, they have beaten inflation quite nicely.
