Portuguese pension funds had average returns of -0.6% in July, mainly due to the bad performance of equities, according to Mercer.

Bonds in Portuguese funds’ portfolios performed positively this month, with an average return of 0.4%. Euro fixed rate bonds returned 0.6%, while Euro floating rate bonds returned -0.1% and non-Euro bonds’ returns were 1.2%.

The funds’ equity holdings all performed negative, with an average return of -3.6%. European equities returned -4.5%, while other equities did slightly better at -2.0%.

The estimated average year to date returns for Portuguese pension funds was -0.2%. The year to date returns for bonds was 1.3%, while the return for equities was -0.6%.

Nuno Silva, Mercer Associate, said that the performance was affected by the uncertainty around the US debt problem and the ability of EU leaders in finding a solution to the sovereign debt crisis.

“This uncertainty was compounded by lack of evidence of economic recovery. Although the largest share of the portfolios of pension funds is fixed-rate bonds in the Euro area, which had a positive performance, other parts of the portfolios have a significant weight so its poor performance resulted in a negative return of pension funds,” he said.

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