Irish pension managed funds delivered another positive month of returns
during October, with an average return of 3.0% for the
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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