Irish Economy
Irish pension managed funds delivered positive returns in February
By Finfacts Team
Mar 6, 2014 - 3:24 AM

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Irish pension managed funds delivered a positive month of returns during February, with an average return of 2.5% for the month. Irish Life Investment Managers took top spot with a return of 2.9% for the month, while Merrion Investment Managers propped up the league table with a return of 1.8%.

Having lost ground in January, managed funds have now returned 1.5% on average so far in 2014. Irish Life Investment Managers delivered the strongest return over the year to date at 2.1%, while Prescient Investment Managers produced the weakest return, returning 0.0% over the same period. Over the past twelve months, the average fund return was 13.4%. Returns for the year ranged from 17.1% (Standard Life Investments) to 11.3% (Prescient Investment Managers).

Rubicon Investment Consulting said the average managed fund return has been a healthy 8.8% per annum over the past three years. The five-year average return is very strong, at 13.9% per annum. Irish group pension managed fund returns over the past ten years have been 5.1% 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.

LCP: Lane Clark & Peacock Ireland February 2014 Investment Summary

Aon Hewitt Ireland said that the Aon Hewitt Managed Fund Index, an index of traditional Irish pension managed funds, increased by 2.8% in February. This has offset the negative performance in January, and overall the index is up 2.2% since the beginning of 2014.

Global equity markets improved in February and reversed January's losses, with the FTSE World Index climbing 2.4% in euro terms. Following a disappointing start to the year, the S&P 500 Index rose to yet another record high at the end of February, following comments from the Federal Reserve Chair, Janet Yellen, that the Central Bank may change its strategy for reducing asset purchases should the economy weaken.

Emerging market equities climbed 0.9% in February as measured by the MSCI Emerging Markets Index, while the FTSE Japan experienced another negative return in February, returning -2.9%. The ISEQ Index returned 11.7% in February and stands at 14.6% year to date.

"Stock markets experienced sharp falls in January. However, markets have reacted positively to the Federal Reserve's comments and these losses have been mostly recovered in February. Returns were slightly dampened towards the end of the month, amid growing concerns over tensions in the Ukraine," commented Denis Lyons, investment consultant with Aon Hewitt.

Potential monetary stimulus from the European Central Bank boosted the demand for Eurozone bonds. Eurozone Government bonds improved marginally in February. The German 10 year bund yield was down 3 bps to 1.63%%. The French 10 year yield also fell 3 bps to 2.20%, while the Dutch 10 year yield was down 2 bps to 1.85%. Peripheral Eurozone bond yields also fell over the month, with the Italian and Spanish 10 year bond yields decreasing 29 bps and 15 bps respectively to 3.48% and 3.51%. The Irish 10 year bond yield fell 21 bps to 3.10%.

"Irish Defined Benefit Pension Schemes will have seen very little change in the value of their liabilities over the month, given the slight change in core bond yields. However, positive performance from growth assets will have had a positive impact on schemes, and schemes will generally see an improvement in their funding level," added Lyons.

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