Irish Economy
Irish pension managed funds up an average 6.7% in year to July
By Michael Hennigan, Finfacts founder and editor
Aug 7, 2014 - 2:47 AM

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Irish pension managed funds delivered mostly positive returns during July, with a mean gain of 0.5% for the month. Managed funds have returned 6.7% on average over the first seven months of 2014.

According to data from Rubicon Investment Consulting, Friends First, Irish Life Investment Managers and Merrion Investment Managers shared top spot in July with returns of 0.9% for the month, while Setanta Asset Management propped up the league table with a return of -1.0%. Irish Life Investment  Managers delivered the strongest return over the year to date at 7.6%, while Merrion Investment Managers produced the weakest return, returning 5.7% over the same period. Over the past twelve months, the average fund return was 13.5%. Returns for the year ranged from 14.7% (Irish Life Investment Managers) to 11.6% (Setanta Asset Management).

Fiona Daly, managing director, commented: "The average managed fund return has been a healthy 12.2% per annum over the past three years. The five-year average return is very strong, at 10.8% per annum. Irish group pension managed fund returns over the past ten years have been 5.6% per annum on

The Aon Hewitt Managed Fund Index, an index of traditional Irish pension managed funds, increased by 0.4% in June. This has contributed to the index delivering a positive return of 7.4% since the beginning of the year.

Global equity markets rose in July with the FTSE All World Index increasing +1.1% in euro terms. Asia Pacific ex Japan was the best performing region in euro terms returning +5.5%, while FTSE All World Eurobloc was the worst performing index, returning -3.4% in euro terms.

"Investors largely ignored geopolitical risks and focused on fundamentals, such as strong US Q2 earnings reports and positive economic data including the US June unemployment rate falling to 6.1% which is the lowest level since September 2008, rather than geopolitical concerns such as the Ukrainian crisis which continued to dominate news headlines," commented Darragh Gavin, investment consultant with Aon Hewitt.

Eurozone government bonds experienced a strong month again in July. The German 10 year bund yield hit a record low to finish at 1.19%, a decrease of 6 basis points (100 bps = 1%) over the month, while the French 10 year bond yield fell 2 bps to 1.57%. Peripheral Eurozone bond yields also fell over the month with the Spanish 10 year bond yield falling 14 bps to 2.53%.

"Irish Defined Benefit pension schemes will have seen their liabilities increase again in July given the continuing fall in core Eurozone government bond yields leading to a decrease in their funding levels, with the increase in liabilities not being fully offset by the gains in global equities," continued Gavin.

LCP Ireland commented: "Global equities increased by 0.9% over the month. Long dated AAA Eurozone bonds also increased in July as bond yields fell for a seventh month in a row.

The funding level of a typical DB (defined benefit) scheme increased by approximately 0.2%, as assets increased more than liabilities.

All of our sample DC (defined contribution) schemes rose in July as all asset classes had positive returns." See full article.

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