Irish pension managed funds rose by 2.0% on average in August. Despite weak economic data and continued fallout from the sub-prime mortgage crisis, equity markets rallied during August as the oil price declined dramatically and the dollar strengthened against most major currencies. Funds are down 15.2% in 2008.

Setanta Asset Management was the best performing manager over the month with a return of 3.2%. Standard Life Investments delivered the worst performance over the month, with a return of 1.1%. Despite these positive returns, pension funds are still well in the red for 2008, by 15.2% on average. Irish pension funds have now lost 18.5% of their value over the past twelve months.

Fiona Daly, Managing Director of Rubicon Investment Consulting commented: "The average managed fund has shown a very disappointing return of 0.4% per annum over the past three years. The five year returns to the end of August are somewhat better, with the average managed fund delivering a return of 5.2% per annum over this period. Irish group pension managed fund returns over the past ten years have been a disappointing 3.9% per annum on average, barely ahead of the Irish inflation rate of 3.8% per annum over the same time horizon. Indeed, only half of the funds surveyed outperformed inflation over this period.

Over the longer term, pension managed fund returns are considerably stronger. In the fifteen years to the end of August 2008, the average return was 7.2% per annum (based on 9 funds), while over the past twenty years the average fund has returned 8.0% per annum (based on 6 funds).

When considering these returns it is important to remember that the investment horizon of most pension schemes is generally over 25 years, and that equities have historically provided significantly higher returns over the long-term than bonds, property or cash, although at the cost of greater volatility.

It is worth noting that members of defined benefit schemes and younger members of defined contribution schemes should not get overly worried about short or medium term declines in equity markets. However, older members of defined contribution schemes need to ensure that they adopt a lower risk investment strategy as they approach retirement age."