Irish pension funds decline in July
By Finfacts Team
Aug 4, 2011 - 5:19 AM

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Aon Hewitt Ireland says that Irish pension funds declined in July.

Global equity markets fell in July as investors sold off risky assets in the midst of uncertainty about the US debt ceiling and the Euro sovereign debt crisis. Irish pension investors benefited from the weakening Euro which mitigated the losses to some extent.

"Markets exhibited clear 'risk-off' behaviour in July," commented Denis Lyons, senior investment Consultant with Aon Hewitt. "Equities fell substantially while a flight to quality saw an increase in demand for core Eurozone bonds. This led to declines in German and French government bonds yields."

"Corporate earnings in the US were overshadowed by the debate in Congress over raising the federal debt ceiling," noted Lyons. "The S&P 500 fell by 2.1% in June, though a strengthening dollar improved returns for Euro based investors."

"Defined benefits plans suffered as falling bond yields saw the minimum funding standard liabilities increase," added Denis Lyons. "Combined with declining asset values, schemes' funding levels came under renewed pressure in July."

The Aon Hewitt Managed Index, an index of traditional managed pension funds fell by 1.2% in June. The index has fallen by 1.8% since the start of the year.

In the fixed income area, Irish funds are still largely invested in the low yield bonds of core Eurozone countries.

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