Irish pension managed funds delivered a positive
month of returns during February, with an average return of 2.5% for the month.
Irish Life Investment Managers took top spot with a return of 2.9% for the
month, while Merrion Investment Managers propped up the league table with a
return of 1.8%.
Having lost ground in January, managed funds have
now returned 1.5% on average so far in 2014. Irish Life Investment Managers
delivered the strongest return over the year to date at 2.1%, while Prescient
Investment Managers produced the weakest return, returning 0.0% over the same
period. Over the past twelve months, the average fund return was 13.4%. Returns
for the year ranged from 17.1% (Standard Life Investments) to 11.3% (Prescient
Rubicon Investment Consulting said the average managed fund return has
been a healthy 8.8% per annum over the past three years. The five-year average
return is very strong, at 13.9% per annum. Irish group pension managed fund
returns over the past ten years have been 5.1% 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
LCP: Lane Clark &
February 2014 Investment Summary
Aon Hewitt Ireland said that the Aon Hewitt
Managed Fund Index, an index of traditional Irish pension managed funds,
increased by 2.8% in February. This has offset the negative performance in
January, and overall the index is up 2.2% since the beginning of 2014.
Global equity markets improved in February and reversed January's losses, with
the FTSE World Index climbing 2.4% in euro terms. Following a disappointing
start to the year, the S&P 500 Index rose to yet another record high at the end
of February, following comments from the Federal Reserve Chair, Janet Yellen,
that the Central Bank may change its strategy for reducing asset purchases
should the economy weaken.
Emerging market equities climbed 0.9% in February as measured by the MSCI
Emerging Markets Index, while the FTSE Japan experienced another negative return
in February, returning -2.9%. The ISEQ Index returned 11.7% in February and
stands at 14.6% year to date.
"Stock markets experienced sharp falls in January. However, markets have reacted
positively to the Federal Reserve's comments and these losses have been mostly
recovered in February. Returns were slightly dampened towards the end of the
month, amid growing concerns over tensions in the Ukraine," commented Denis
Lyons, investment consultant with Aon Hewitt.
Potential monetary stimulus from the European Central Bank boosted the demand
for Eurozone bonds. Eurozone Government bonds improved marginally in February.
The German 10 year bund yield was down 3 bps to 1.63%%. The French 10 year yield
also fell 3 bps to 2.20%, while the Dutch 10 year yield was down 2 bps to 1.85%.
Peripheral Eurozone bond yields also fell over the month, with the Italian and
Spanish 10 year bond yields decreasing 29 bps and 15 bps respectively to 3.48%
and 3.51%. The Irish 10 year bond yield fell 21 bps to 3.10%.
"Irish Defined Benefit Pension Schemes will have seen very little change in the
value of their liabilities over the month, given the slight change in core bond
yields. However, positive performance from growth assets will have had a
positive impact on schemes, and schemes will generally see an improvement in
their funding level," added Lyons.
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