Irish pension managed funds delivered further
positive returns during April, with an average return of 0.8% for the month.
Standard Life Investments took top spot with a return of 1.2% for the month,
while Friends First/F&C propped up the league table with a return of 0.2%.
Building on the first quarter’s gains, these returns have resulted in managed
funds returning 8.2% on average over the first four months of 2013.
Setanta Asset Management delivered the strongest
return over the four months at 11.2%, while Merrion Investment Managers
produced the weakest return, gaining 7.0% over the same period. Over the past
twelve months, the average fund return was 15.4%. Returns for the year ranged
from 18.8% (Setanta Asset Management) to 14.2% (Friends First/F&C and Zurich
Fiona Daly, managing director of Rubicon
Investment Consulting, commented: "The average managed
fund return has been a healthy 7.5% per annum over the past three years. The
five-year average return is 2.7% per annum. Irish group pension managed fund
returns over the past ten years have been 5.7% per annum on average, compared
with the Irish inflation rate of 1.7% per annum over the same time horizon. All
of the managed funds surveyed outperformed inflation over this period."
Meanwhile, Aon Hewitt, a unit of London-based
Aon plc, says its Aon Hewitt Managed Fund Index, an index of
traditional managed pension funds, rose 1.01 % in April. The Index has delivered
a positive return of 8.61% since the start of 2013.
"Pension fund asset values have gained from a strong rally in equity markets
which continued into the second quarter," commented Betty O' Reilly, senior
investment consultant with Aon Hewitt. North American equities continued to
rise over April supported by positive earnings growth, although with the euro
strengthening against the US dollar. Euro based investors will have experienced
marginally negative returns from the region. Eurozone equities, which had lagged
behind other regions in the first quarter, were up 3.18% from last month as
contagion from instability in Italy and Cyprus diminished.
"We have seen a renewed sense of optimism amongst investors recently. This is in
sharp contrast to the nervousness surrounding the 'fiscal cliff' at the end of
2012. The VIX index, which measures investor feeling in the market, is slightly
higher than the previous month standing at 13.52 as at 30 April, however this is
a far cry from the 22.7 before the turn of the year," continued O' Reilly.
Prices on Eurozone bonds also rallied with expectations of an ECB rate cut
underpinning prices and the diminution of perceived risk in peripheral eurozone
regions. The Merrill Lynch 10+ Year Bond Index yield fell from 3.4% at the start
of the month to 3.04% at the close of April. German 10 year Bund yields also
fell from 1.29% to 1.20% throughout the course of the month leading to an
increase in pensioner liability costs.
"For Irish Defined Benefit Schemes record lows in AAA bond yields continue to
keep the cost of pension provision stubbornly high. Despite healthy returns from
risk assets many schemes remain underfunded," remarked O'Reilly.
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