Having declined 11.4% over the first three months of the
year, Irish pension funds rallied during April, rising
4.2% on average. Standard Life Investments were the best
performing manager over the month with a return of 5.1%.
Oppenheim Investment Managers delivered the weakest
performance over the month, returning just 2.9%. So far
this year, pension funds are still in the red, by 7.7%
on average. Although it is too early to be confident,
last month’s returns may signal the beginning of a
recovery in the fortunes of pension funds. Irish pension
funds have now lost 12.6% of their value over the past
twelve months.
The average managed fund has shown a respectable gain of
6.8% per annum over the past three years. The five year
returns to the end of April remain strong, with the
average managed fund delivering a return of 8.9% per
annum over this period. Due to the recent downturn in
equity markets, Irish group pension managed fund returns
over the past ten years have been a disappointing 3.7%
per annum on average, compared with an Irish inflation
rate of 3.8% per annum over the same period. 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.
Market Update
Fiona Daly, Managing
Director of
Rubicon Investment Consulting commented:
For the first month
since October 2007, all major equity markets posted
positive returns during April. Global equity markets,
once again, continued to remain sensitive to the state
of the US economy, with recessionary fears and the state
of credit markets remaining at the fore. The Federal
Reserve cut interest rates again, by 0.25%, bringing the
base rate to 2.0%. Commentary by the Fed hinted that
this may be the low point for rates in the current
cycle. US economic data was mixed. So too were US
corporate earnings results, although these were broadly
positive. This boosted investor confidence that the US
economy could withstand the effects of the consumer
slowdown and credit crisis. Indeed, some investors began
to entertain the view that the worst may be over. In
response to the slowing housing market and tightening
credit conditions, the Bank of England cut rates by
0.25%, to 5.0%. Meanwhile, the European Central Bank,
once again, held interest rates at 4.0%, as rising
Eurozone inflation continues to concern the ECB. Indeed,
consumer prices in the Eurozone rose to 3.6% in the year
to March, reducing the likelihood that the ECB will cut
interest rates in the near future. Reduced supply,
political tensions and greater demand from China pushed
the price of oil to a record high of over $119 per
barrel. Meanwhile, the euro reached new highs against
the dollar and sterling during April.
Group Pension Managed Fund Returns to 30 April 2008
|
|
1 Month
% |
4 Months
% |
1 Year
% |
3 Years
% p.a. |
5 Years
% p.a. |
10 Years
% p.a. |
|
AIB Investment Managers |
4.5 |
-7.9 |
-10.4 |
8.9 |
9.9 |
3.3 |
|
Bank of Ireland Asset Management |
4.2 |
-7.0 |
-15.4 |
3.3 |
6.6 |
4.1 |
|
Canada Life/Setanta |
3.0 |
-6.8 |
-10.5 |
5.5 |
8.4 |
3.1 |
|
Eagle Star |
4.4 |
-7.3 |
-10.0 |
8.8 |
10.4 |
4.2 |
|
Friends First/F&C |
4.8 |
-9.8 |
-14.6 |
6.1 |
8.5 |
3.1 |
|
Hibernian Investment Managers |
4.5 |
-7.7 |
-12.1 |
7.0 |
9.1 |
3.8 |
|
Irish Life Investment Managers |
3.9 |
-7.6 |
-12.6 |
7.1 |
9.8 |
4.0 |
|
KBC Asset Management |
4.7 |
-8.1 |
-15.0 |
6.1 |
7.8 |
2.5 |
|
Oppenheim Investment Managers |
2.9 |
-7.5 |
-10.9 |
7.3 |
9.0 |
5.3 |
|
Standard Life Investments |
5.1 |
-7.2 |
-14.5 |
7.6 |
9.3 |
3.1 |
|
Average |
4.2 |
-7.7 |
-12.6 |
6.8 |
8.9 |
3.7 |
