December was a month of falling share prices but in 2015 average annual returns on Irish pension funds were up to 10%.


Rubicon Investment Consulting commented that December was a very disappointing month for Irish pension funds, which fell back -3.7% on average. Merrion Investment Managers were ranked top this month with a return of -3.2%, while Setanta Asset Management propped up the league table with a return of -4.5%. The final quarter of 2015 was quite strong, with the previous two months having delivered gains. The average return over the fourth quarter was 6.0%. Standard Life Investments top the table over the quarter with a return of 7.7%, while New Ireland produced the lowest return at 4.8%. Over the year of 2015, the average fund return was a respectable 9.3%. Returns for the year ranged from 13.6% (Merrion Investment Managers) to 6.5% (Kleinwort Benson Investors).

The average managed fund return has been a very strong 13.8% per annum over the past three years. The five-year average return is a healthy 10.3% per annum. Irish group pension managed fund returns over the past ten years have been 4.7% per annum on average.

The Aon Hewitt Managed Fund Index, an index representing the performance of traditional Irish pension managed funds, fell -3.2% in December. Despite negative performance over the month, the index delivered a positive return of 10.1% for 2015.

Global equity markets fell over the month of December. The FTSE All World Index decreased by -4.4% in euro terms, but returned +9.6% for the year. The ISEQ continued to show relative strength returning -0.7% over the month and was one of the strongest performing markets in 2015, returning +33.1%. Emerging Markets struggle continued as they fell over the month and finished the year in the red, down over 5%.

"In a year that saw the onset of quantitative easing by the European Central Bank, an interest rate increase by the Federal Reserve, an economic slowdown in China and a sharp drop in the stock markets in August, most regions provided euro based investors with a positive return. Although, for some regions much of the return can be attributed to euro currency weakness in 2015," commented Craig Keane, investment consultant at Aon Hewitt.

Core Eurozone bond yields increased over the month. The German 10 year bond yield finished at 0.64%, an increase of 16 basis points (bps) or 0.16%. The French 10 year bond yield increased by 14 bps to 0.98%. The peripheral Eurozone government bond yields had a mixed month. The Portuguese 10 year bond yield increased 17 bps to 2.53%. The Italian 10 year bond yield increased to 1.60%, an increase of 14 bps. The Irish 10 year bond decreased 7 bps, finishing at 0.96%.

"Irish defined benefit pension schemes will most likely have seen their funding levels decrease over December due to negative asset returns outweighing the benefit from falling liabilities due to rising bond yields"  Keane added.

Irish pensions 2015 returns