Pension funds need to remain agile in their investment strategies, Aon Hewitt has said.

According to a survey from Aon Hewitt, fund managers expected that equities were likely to offer pension funds the best returns during 2013, given performance to date over the first quarter.

Even though Aon Hewitt said that this result reflects the dominant view from investors at present, it said that the first quarter's performance could be an unreliable guide to market conditions for the year as a whole.

Of the 120 fund managers, who took part in the survey, 31% expected global equities to be the top performer for 2013, 24% predicted that emerging market equities would be the best performer of the year even though they had a weak start to the year with marginal falls in the first quarter, and European equities finished 4th place on the list of both potential market leaders and laggards.

When asked about which asset classes were likely to be the weakest performers for 2013, 32% of those polled expected investment-grade credit to deliver the weakest returns for the year, while inflation-linked bonds was ranked second most likely poor performer by 14% of those polled, despite a strong start to the year.

Tapan Datta, Aon Hewitt global head of asset allocation said: "Given the strong start to the year for index-linked gilts, which were ahead of global equities in the first quarter, the current view from fund managers is that these gains for inflation protected bonds may be surrendered by the end of the year. In recent years, some big moves in the first quarter have been turned upside down as the year progresses."

He added: "Markets have always been subject to fluctuation over time, creating opportunities for investors to make returns on their investment. However, the results of this survey reveal just how quickly the outlook for asset classes can change.

"While pension funds are long-term investors and we do not necessarily encourage a short-term view, this data does highlight the need for pension funds to monitor fluid market conditions and to be able to move swiftly where necessary."

First published 30.04.2013

monique_simpson@wilmington.co.uk