Irish pension managed funds lost 1.0% on average in January. Merrion Investment Managers took top spot with a return of  -0.2% for the month, while Prescient Investment Managers propped up the league table with a return of -1.9%.

Despite this decline, managed funds have returned 13.6% on average over the past twelve months. Standard Life Investments delivered the strongest return over the year at 16.5%, while Kleinwort Benson Investors produced the weakest return, gaining 11.8% over the same period.

Rubicon Investment Consulting said that the average managed fund return has been a healthy 8.4% per annum over the past three years. "The five-year average return is  very strong, at 12.0% per annum. Irish group pension managed fund returns over the past ten years have been 4.9% 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 Hewitt Managed Fund Index, an index of traditional Irish pension managed funds, decreased by -0.59% in January. This has contributed to the index delivering a positive return of 14.09% in the past 12 months.

Global equity markets declined in January with the FTSE All World Index falling -1.9% in euro terms. Risky assets have had a disappointing start to the year, driven by weaker than expected Chinese PMI data and the US Federal Reserve lowering its monthly asset purchases from $85 billion per month to $65 billion per month.

Emerging market currencies also came under pressure this month but stabilised somewhat following central bank action in a number of countries. Emerging Markets and Pacific Basin ex Japan were both weak in January, down -4.5% and -3.3% respectively in euro terms. North America performed better in both local terms (-0.4%) and euro terms (-1.3%) following solid GDP growth reported in Q4.

"Stock markets have experienced sharp falls in recent days following heavy losses in Asia and on Wall Street. 2014 is shaping up to be a much more challenging year for investors. Developing markets for example, which now account for a 50% share of global GDP, are suffering as the US Federal Reserve begins cutting back on its asset purchase programme," commented Brian Delaney, investment consultant with Aon Hewitt.

Core Eurozone government bond yields fell during the month of January. The German 10 year Bund yield was down 37 bps to 1.57%. The French 10 year yield fell 20 bps to 2.23%, while the Dutch 10 year yield fell 36 bps to 1.87%. Peripheral Eurozone Bond yields also fell over the month, with the Italian and Spanish 10 year bond yields decreasing 37 bps and 48 bps respectively to 3.77% and 3.66%. The Irish 10 year bond yield slipped 16 bps to 3.31%.

"Irish Defined Benefit Pension Schemes will have seen their liabilities rise in January given the fall in core yields. Negative performance from growth assets has also had a negative impact on schemes, and schemes will generally see a fall in their funding level," added Delaney.

Aon Hewitt returns for 2013 [pdf]

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