Returns on Irish pension managed funds in October were above 6% in November offsetting the losses in the previous month.


Rubicon Investment Consulting reports that Irish pension managed funds made strong gains during October, with the average gain being 6.7%. Standard Life Investments were ranked top this month with a return of 7.8%, while Merrion Investment Managers propped up the league table with a return of 5.6%. This month's gains have broadly offset the losses incurred over the third quarter, with the average return over the past four months being zero.

The first ten months of 2015 have seen solid pension managed fund returns, with an average return of 10.0%. Merrion Investment Managers top the table over the year to date with a return of 13.2%, while New Ireland produced the lowest return at 7.7%. Over the past twelve months, the average fund return was 14.4%. Returns for the year ranged from 19.6% (Merrion Investment Managers) to 9.8% (New Ireland).

The average managed fund return has been a very strong 14.9% per annum over the past three years. The five-year average return is a healthy 11.5% per annum. Irish group pension managed fund returns over the past ten years have been 5.5% per annum on average.

The Aon Hewitt Managed Fund Index, an index representing the performance of traditional Irish pension managed funds, increased by 6.2% in October. The index has delivered a positive return of 10.6% since the beginning of the year and 14.6% over the past 12 months.

Global equity markets rose over the month of October. The FTSE All World Index increased by 9.0% in euro terms. The ISEQ was the weakest performing index returning 4.8% over the month while the FTSE Japan was the best performing region, returning 11.2%.

"Markets performed strongly over the month of October with some improving corporate earnings reports out of the US, following a number of months that saw double digit falls in equity markets. Weak Q3 GDP data from the US and UK overshadowed the markets in the last week of the month while investors remain focussed on China and the timing of US interest rate rises," commented Darragh Gavin, Investment Consultant at Aon Hewitt.

Core Eurozone bond yields decreased over the month with the German 10 year bond yield finished at 0.52%, a decrease of 7 bps while the French 10 year bond yield decreased 12 bps to 0.80%. The peripheral Eurozone government bond yields had a mixed month. The Portuguese 10 year bond yield increased 14 bps to 2.54% with the Italian 10 year bond yield decreasing to 1.60%, a decrease of 13 bps. The Irish 10 year bond decreased 27 basis points (bps) or 0.27%, finishing at 0.96%.

"Irish defined benefit pension schemes will most likely have seen their funding positions increase over October due to positive asset returns outweighing the increase in liabilities of pension schemes," added Gavin.

LCP Ireland said that global equity markets rose by 9.0% in October and by 10.7% so far in 2015.

Bond markets increased over the month with long-dated Eurozone government bond prices up 1.3% by month end.

The funding level of a sample DB scheme improved as assets increased more than liabilities, with the majority of asset classes rising in October.

"Our High Risk, Medium Risk and Pension Purchase sample DC strategies all had positive returns for the month. Our High Risk and Medium Risk strategies significantly outperformed the Pension Purchase strategy, as those with a high exposure to equities performed the best" — see report.

Irish pensions 2015