The nine mandatory private pension funds had yields that went from a high of 5.7% to a low of 2.6% between October 2010 and October 2011, some of the most difficult 12 months in the history of private pensions.
The market’s top performer is the fund managed by BRD with a yield of 5.74% over the past 12 months, followed by Eureko, with a 4.82% yield.
The third-best performer was AZT Viitorul Tau, managed by Allianz Tiriac, with a 4.32% yield. At the opposite end of the ranking are the fund managed by Alico with a 2.61% yield and the Vital fund managed by Aegon, with a 2.7% yield.
The yields posted in the last 12 months by private pension funds reveal how well the investments made by fund managers have performed, considering that monthly contributions amounted to over 100 million lei (EUR22.9 million).
Although yields have declined as opposed to previous years, no private pension funds have recorded losses in the past 12 months. The significant corrections recorded on the equity markets under the impact of the sovereign debt crisis have been partially offset by acquisitions of government bonds, low-risk fixed-income instruments, and by increased investments in bank deposits.
The amounts invested by private pension funds in bank deposits have doubled since October 2010, from RON336 million to RON680 million, while investments in government bonds rose 57% to RON4.044 billion. The amounts invested by equity funds rose even if the value of shares significantly declined over the past 12 months.
Equity investments amounted to RON687 million at the end of October, from RON472 million last year, considering that the Bucharest Stock Exchange fell by 13.3% in the interval.
Pension funds also have investments on external markets, which have been affected by the much more extensive declines recorded on mature markets: the Vienna stock exchange lost 26% on the year, the Paris stock exchange lost 15%, while the London exchange was more resilient, losing just 2.3% between October 31, 2010 and October 31, 2011.
At the end of October, around 3% of the RON6.035 billion assets managed by private pension funds were invested in foreign shares. In other words, the funds’ exposure to foreign shares was RON181 million, below the RON120 million in October 2010.
The yields obtained by private pension funds from investments in bonds are of around 7% a year, while interests collected from amounts placed in bank deposits can exceed 7% a year, considering that pension managers can get much higher interests than those on the market, thanks to the significant amounts of assets they manage.
Mandatory private pension funds invest over the long term. The funds are set to pay pensions to the 5.4 million Romanians who currently contribute to the system over more than 20 years, so they turn towards investments that bring long-term yields, and are not very risky.
Over the past 12 months, assets managed by private pension funds went up by RON2 billion, to a total of RON6.035 billion. The increase was largely driven by the monthly contributions from the over 5 million wage earners.
(English version by Daniela Stoican)