Irish pension managed funds delivered another positive month of returns during October, with an average return of 3.0% for the month.
Setanta Asset Management and Kleinwort Benson Investors shared top spot with returns of 3.2% for the month, while Merrion Investment Managers propped up the league table with a return of 2.7%. With eight out of ten months recording gains, managed funds have now returned 14.3% on average so far in 2013. Setanta Asset Management delivered the strongest return over the year to date at 17.1%, while Prescient Investment Managers produced the weakest return, gaining 12.7% over the same period. Over the past twelve months, the average fund return was 17.0%. Returns for the year ranged from 19.4% (Setanta Asset Management) to 15.2% (Prescient Investment Managers).
Rubicon Investment Consulting said that the average managed fund return has been a very healthy 9.7% per annum over the past three years. The five-year average return is strong, at 9.6% per annum. Irish group pension managed fund returns over the past ten years have been 5.3% per annum on average, compared with the Irish inflation rate of 1.6% per annum over the same time horizon. All of the managed funds surveyed outperformed inflation over this period.
Meanwhile, the Aon Hewitt Managed Fund Index, an index of traditional Irish pension managed funds, also increased by 3.0% in October. This has contributed to the index delivering a positive return of 14.4% since the beginning of 2013.
Equity markets maintained last month's positive performance. Despite the US Government shutdown and the prospect of the debt ceiling not being lifted, looming over investors, the Standard and Poor's 500 Index closed at 7 record highs during October and closed the month up 4.5%. Global equities rose by 3.5% in October, as measured by the FTSE World Index.
"The stalemate between the Obama administration and Republicans weighed on investor sentiment towards the beginning of the month. However, the official nomination of Janet Yellen by President Obama to become the next Federal Reserve Chairman improved investor attitude. This, coupled with President Barack Obama signing legislation to end the 16 day shutdown and increase the US debt ceiling lead markets to improving," commented Denis Lyons, investment consultant with Aon Hewitt. "US equity markets will have increased by a greater amount in local Euro terms than for a Eurozone investor, due to the US dollar reaching its lowest level versus the Euro since November 2011 towards the end of the month."
Eurozone government bonds strengthened across the board for the month, following the news that Euro area inflation fell to a four year low of 0.7%.
"Most core and peripheral Eurozone countries have seen their bond yields decrease over the month," remarked Lyons. "Irish Defined Benefit Pension Schemes will have seen a slight increase in the value of their liabilities over the month due to these falling bond yields. Despite this slip, yields have risen significantly year to date and so liabilities should still have benefitted over the year. There has been positive growth asset performance over the month to negate the fall in yields and many schemes should see in increase in their funding level," concluded Lyons.
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