What Are They Best Performing Private Pension Funds?

When you compare the performance of these private pension funds it’s important to remember that historical results are absolutely not indicative of future performance. 

Managed private pension performance is heavily correlated to how well the global economy is performing. So if the overall stock markets are performing well, so will your pension. But, if the economy is in recession or a “bear market” the performance of your pension will go down.

• Related Guide: Best SIPP Providers For DIY Retirement Investing Compared

The performance of your pension fund over its lifetime can make a great deal of difference to the size of your final pension pot, and in turn to the income and capital that you will be able to call on when you retire.

The performance of individual funds can vary greatly for example Sottish Equitable’s Technology ARC Pension fund has grown at an annualised rate of 23.16% over the last ten years, according to Morningstar data.

Whilst, the Zurich JP Morgan New Europe Pension fund has lost -36.58% over the same period.

These kinds of divergences mean the choice of pension fund could be crucial to the performance or growth of your pension pot. But what should an investor be looking for in a pension fund.

But first, what is a pension fund?

A pension fund is a tax-efficient savings plan designed to grow over the long term. Investors put money into their pensions over their working lifetime, in expectation of creating a pot of investments and cash that they can draw on in later life.

Pension funds are often made up of a portfolio of assets that can include stocks and shares bonds other funds and commercial property.

Pension funds are often managed with long-term growth in mind, but they can also be thematic focusing on say European smaller companies, global technology or government bonds.

That means that investors are faced with making both an asset allocation choice and a choice about the manager /pension fund they will invest in.

According to data from fund research specialists Morningstar there are 1431 pension funds available to UK investors that focus on Global Equities.

Funds in this sector have enjoyed some of the best performance over the last 10- years with 15 funds producing returns of 14 % or greater. Five of these funds (all of which are managed by Scottish Equitable) returned more than 22% in that time frame.

By comparison, there are 160 funds focusing on Global Fixed Income Securities, even the best performer among this cohort, which again is a fund managed by Scottish Equitable, the Overseas Corporate Bond Tracker, returned just +3.71% over the last decade.

Best-performing individual pension funds

Out of just over 14,000 pension funds in the Morningstar database it’s Scottish Equitable’s Technology ARC Pension fund that takes the top spot with an impressive 23.16% of annulaised returns since 2013.

The fund focuses on large-cap growth stocks and was established back in November 2011, it manages just under £590 million, as of March 31st 2023.

Away from the Scottish Equitable stable FIL Inurance’s Global Technology Fund returned an annualised 20.18% in the last decade, whilst AXA Framlington’s Global Tech ZP Pension Fund has returned an annualised 18.39%  over the last 10 years.

The best performing pensions funds over the last 10 years

Fund Name	3 Yr Std Dev	YTD Return GBP	1 Yr Return %	3 Yr Anlsd %	5 Yr Anlsd %	10 Yr Anlsd %
Scottish Equitable Technology ARC Pension Fund	19.9	35.15	22.67	14.98	21.88	23.05
Scottish Equitable Technology SH Pension Fund	19.86	34.28	21.83	14.19	21.05	22.22
Scottish Equitable Technology 1.00 SC Pension Fund	19.89	34.52	21.82	14.19	21.04	22.21
Scottish Equitable Technology SC Pension Fund	19.85	34.27	21.82	14.19	21.04	22.21
Scottish Equitable Technology Pension Fund	19.89	34.51	21.82	14.19	21.04	22.21
Global Technology Fund GBP Shares	15.54	22.26	12.16	14.29	17.83	20.05
Zurich AXA Framlington Global Technology ZP Pension Fund	18.54	25.18	8.35	7.49	13.18	18.59
OMR AXA Framlington Global Technology SP	20.39	27.81	7.96	6.61	12.53	18.38
Phoenix Wealth AXA Framlington Global Technology Pension Fund	18.6	24.74	7.76	6.94	12.62	18.11
Phoenix Wealth AXA Framlington Global Technology S3 Pension Fund	18.6	24.74	7.76	6.94	12.62	18.11

Source: Morningstar data

If we look at the database for the performance of pension funds over 5 years we see little change, with technology-focused funds occupying the top spots with a 5-year returns of just over 20%.

Best performing pension funds by asset class

Global Technology funds have been the best-performing asset class over the last 10 years They are followed by North American Equity funds and Japanese Equities.

However, there is quite a big gap between the best-performing Japanese equity fund, the Sanlam Invesco Perpetual Japan Smaller Companies Pension Fund, and the other 338 funds in the sector.

The returns among North American equity funds are far more evenly distributed with the range of 10-year returns among the top 20 funds in a  spread between 15.38% and 17.08%.

Equity funds seem to have outperformed their fixed-income peers over the last 10 years.

For example, the Aviva Pension Capital International Global High Income OpportunitiesFund is the best performer, among global high-yield funds but it has only returned an annualised  6.21% in that time frame.

The top 10 Global High Yield Pension Funds over the last 10 years

Fund Name	3 Yr Std Dev	YTD Return GBP	1 Yr Return %	3 Yr Anlsd %	5 Yr Anlsd %	10 Yr Anlsd %
Aviva Pension Capital International Global High Income Opport Pension Fund	5.79	1.46	-0.7	1.99	3.91	6.25
OMR Jupiter Emerging Market Debt	7.97	0.06	-1.42	-2.52	1.46	4.29
Canlife CT Emerging Markets Bond Pn PS4	7.68	-1.52	-4.05	-3.28	0.57	3.54
OMR Merian Emerging Market Debt Pension	7.99	-0.47	-2.17	-3.26	0.68	3.5
Scottish Equitable Baillie Gifford High Yield Bond ARC Pension Fund	8.1	4.52	4.14	-1.27	0.89	3.17
Ninety One Emerging Markets Local Currency Debt S6	7.51	2.72	1.79	0.87	3.32	2.87
RLP Global High Yield Bond Pension Fund	8.37	4.16	3.02	-1.32	0.72	2.51
SJP International Corporate Bond Acc Pen	6.69	4.29	4.35	-0.99	0.47	2.46
Standard Life Assurance SLI Global High Yield Bond B Pension Fund	6.77	5.55	6.12	-0.34	0.75	2.1
Ninety One Emerging Markets Local Currency Debt S14	7.5	2.19	1.03	0.12	2.54	2.1

The best European Equity (ex the UK) funds have produced ten year returns of 12.96% the worst performer among the 683 funds in this class delivered just 1.94%.

The Top Ten European Equity (Ex UK) Pension Funds over the last 10 years

Fund Name	3 Yr Std Dev	YTD Return GBP	1 Yr Return %	3 Yr Anlsd %	5 Yr Anlsd %	10 Yr Anlsd %
Sanlam GLG Continental Europe 7 Pension Fund	16.35	-2.17	18.09	10.74	13.67	12.96
ReAssure LG Man GLG Cont Euro Gro	17.35	10.39	15.47	3.98	6.5	12.68
Aviva BlackRock Continental European S6 Pension Fund	19.46	13.64	20.9	11.2	11.96	12.17
Aviva BlackRock European Dynamic S6 Pension Fund	18.98	10.72	19.73	9.35	9.95	12.03
Man GLG Continental European Growth Fund	17.28	10.17	15.17	3.46	5.38	11.68
SIP Janus Henderson European Smaller Companies	18.13	-0.46	7.12	6.27	5.89	11.56
OMR Janus Henderson European Smaller Companies SP	18.13	-0.55	7.04	6.22	5.82	11.48
Scottish Equitable Blackrock European Dynamic ARC Pension Fund	19.3	10.18	18.92	7.87	9.35	11.34
LV= BlackRock European Dynamic Series 2 Pension Fund	19.05	10.9	19.29	8.2	9.18	11.25
HLL BlackRock European Dynamic Pen 50	19.1	10.09	18.79	7.8	9.24	11.24

Source: Morningstar data

The best commodity and energy-focused funds have returned between 5.00% and 7.61% per annum over the last decade, whilst the best property-centric pension funds have generated 9.06%

The Top Ten Commodity/Energy Pension Funds over the last 10 years

Fund Name	3 Yr Std Dev	YTD Return GBP	1 Yr Return %	3 Yr Anlsd %	5 Yr Anlsd %	10 Yr Anlsd %
OMR BlackRock Natrl Res S2 Pension Acc	21.7	-4.96	-0.05	22.47	9.68	7.55
OMR BlackRock Natrl Res Pension Acc	21.7	-5.47	-0.79	21.52	8.86	6.74
Aviva JP Morgan Natural Resources S6 Pension Fund	19.66	-4.74	2.03	21.31	10.94	6.2
Aviva Pension JPM Natural Resources AP Pension Fund	19.75	-4.69	2.2	20.95	10.87	6.08
Aviva Pension JP Morgan Natural Resources Pension Fund	20.95	-4.64	2.12	20.78	10.41	6.05
Ninety One Global Gold S6	28.06	-4.06	14.61	-8.72	12.71	5.85
Zurich JP Morgan Natural Resources ZP Pension Fund	19.76	-5.13	1.55	20.17	10.17	5.4
FL/JPM Natural Resources AP Inet Pension Fund	19.75	-5.19	1.45	20.17	10.18	5.35
Scottish Equitable JPM Natural Resources ARC Pension Fund	19.74	-5.2	1.43	20.03	10.06	5.31
Zurich JP Morgan Natural Resources AP Pension Fund	19.75	-5.19	1.45	20.05	10.07	5.3

Source: Morningstar data

Best performing pension fund managers

The best performing pension managers over the last 10 years are those that have had exposure to global technology and or North Amertican equities.

Simply because of the growth in tech and US equity markets for example the Nasdaq 100 index is up by 377% since September 2013.

As we noted earlier Scottish Equitable (which is owned by Dutch insurer Aegon) manages several top-performing technology funds.

Overall the firm manages 1385 dedicated pension funds 600 of which have returned at least an annualised 1.75% over the last decade.

Other managers that were well represented in the list of best-performing pension funds across all asset classes include

AXA Framlington in combination with both Zurich and Phoenix Wealth

OMR Quitler and OMR Janus Henderson.

UK insurer Aviva, who have funds managed in conjunction with Baillie Gifford, JP Morgan, Investec, and AXA Framlington, as well as under its own banner.

Key points to consider when choosing pension funds

Of course this brings us to key points about fund and manager selection.

Firstly, previous performance is no guarantee of future returns and secondly having a good manager but the worst asset allocation is not likely to be a successful route to long-term capital growth.

Consistency of returns and the effects of compounding will help to build your pension pot over time. Trying to identify which managers and funds are likely to deliver that over the next 25 to thirty years is nigh on impossible.

So investors need to have pensions that allow flexibility within their fund selection.

Picking funds is also not made any easier by inconsistent data and a variety of methods that are used to measure fund performance and risk metrics, and the periods over which they are tracked, by the principal fund data sites.

Screening tools will be useful for compiling a short list of funds and managers but you will likely need to dig down further into each manager and fund before you can make your fund selection and asset allocation decisions.